Inflation, as measured by the core personal consumption expenditures (PCE) price index, rose 0.1% in May on a seasonally adjusted basis, marking a 2.6% increase from a year ago. This matches forecasts closely, with May recording the slowest annual inflation rate since March 2021, when inflation first surpassed the Federal Reserve’s 2% target.
Including food and energy prices, headline inflation remained steady month-over-month and year-over-year, consistent with expectations.
San Francisco Fed President Mary Daly commented on the report, noting that the gradual cooling of inflation signals effective monetary policy and is welcomed by businesses and households facing persistent inflationary pressures.
The Federal Reserve favors the PCE inflation readings over the more widely followed consumer price index (CPI), highlighting the core PCE as a better indicator of long-term inflation trends. Alongside inflation data, the Bureau of Economic Analysis reported a 0.5% increase in personal income for May, exceeding earlier estimates. However, consumer spending rose by a modest 0.2%, below the expected 0.3% increase.
Price moderation in May was driven by declines in goods prices and energy costs, offsetting slight increases in services and food expenditures. Housing prices continued to rise, up 0.4% for the fourth consecutive month, underscoring persistent pressures in shelter-related costs.
Following the report, stock market futures showed modest gains, while Treasury yields declined. Investors revised their expectations for Federal Reserve rate cuts, now anticipating two cuts beginning in September, down from earlier projections of six.
Looking ahead, market analysts and strategists await further insights into the Fed’s stance on interest rates, particularly amid evolving economic indicators such as labor market conditions. The central bank, which last adjusted rates in July 2023 following a series of increases starting in March 2022, continues to monitor economic resilience amidst ongoing inflation dynamics.
The latest economic data provides a detailed perspective on an economy navigating policy adjustments aimed at sustaining growth while managing inflation. With GDP projections indicating moderate expansion in the second quarter and mixed signals from the labor market, stakeholders seek clarity on the Fed’s future steps to balance economic stability and inflation control.
Photo source: Google
By: Montel Kamau
Serrari Financial Analyst
28th June, 2024
Article and News Disclaimer
The information provided on www.serrarigroup.com is for general informational purposes only. While we strive to keep the information up to date and accurate, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the website or the information, products, services, or related graphics contained on the website for any purpose. Any reliance you place on such information is therefore strictly at your own risk.
www.serrarigroup.com is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information on the website is provided on an "as-is" basis, with no guarantee of completeness, accuracy, timeliness, or of the results obtained from the use of this information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
In no event will www.serrarigroup.com be liable to you or anyone else for any decision made or action taken in reliance on the information provided on the website or for any consequential, special, or similar damages, even if advised of the possibility of such damages.
The articles, news, and information presented on www.serrarigroup.com reflect the opinions of the respective authors and contributors and do not necessarily represent the views of the website or its management. Any views or opinions expressed are solely those of the individual authors and do not represent the website's views or opinions as a whole.
The content on www.serrarigroup.com may include links to external websites, which are provided for convenience and informational purposes only. We have no control over the nature, content, and availability of those sites. The inclusion of any links does not necessarily imply a recommendation or endorsement of the views expressed within them.
Every effort is made to keep the website up and running smoothly. However, www.serrarigroup.com takes no responsibility for, and will not be liable for, the website being temporarily unavailable due to technical issues beyond our control.
Please note that laws, regulations, and information can change rapidly, and we advise you to conduct further research and seek professional advice when necessary.
By using www.serrarigroup.com, you agree to this disclaimer and its terms. If you do not agree with this disclaimer, please do not use the website.
www.serrarigroup.com, reserves the right to update, modify, or remove any part of this disclaimer without prior notice. It is your responsibility to review this disclaimer periodically for changes.
Serrari Group 2023
