The Fed’s preferred inflation gauge, the core PCE price index, rose 2.7% year-over-year in May. This was higher than the expected 2.6% growth and a pickup from 2.6% in April. On a monthly basis, the core index was up 0.2%, more than the projected 0.1% growth. The headline index was up 2.3% year-over-year, as expected. This marked a slight pickup from 2.2% in April. On a monthly basis, the index was up 0.1%, as expected..
PCE Price Index
Personal consumption expenditures (PCE) measures and tracks changes for all domestic personal consumption. Core PCE measures the changes in personal consumption less food and energy, making it less volatile than the headline PCE. The PCE Price Index is calculated using PCE data and is a key way to measure changes in purchasing trends and inflation.
The adjacent thumbnail gives us a close-up of the trend in YoY core PCE since January 2012. The first string of red data points highlights the 12 consecutive months when core PCE hovered in a narrow range around its interim low. The second string highlights the lower range from late 2014 through 2015. Core PCE shifted higher in 2016 with a decline in 2017, 2019, and 2020, with a major jump in 2022.
