All articles tagged with #core inflation
The Fed’s preferred inflation gauge, the PCE index, rose 4.1% in May (year over year) and 0.4% month over month, with core PCE up 3.4% year over year and 0.3% month over month, signaling persistent price pressures and keeping the door open for a rate increase within the next 12 months, according to economists who differ on the path ahead.
The May 2026 PCE report shows the Fed’s preferred core inflation at 3.4% year-over-year (up 0.3% for May) and all-items inflation at 4.1% (up 0.4% for the month), with consumer spending rising 0.7% and personal income up 0.7%. GDP grew at a 2.1% annualized rate in Q1, while initial jobless claims fell to 215,000. The data underscore persistent inflation pressures even as growth remains solid, reinforcing the Fed’s cautious-to-hawkish stance on policy.
Inflation rose in April, with the Fed’s preferred PCE price index up 3.8% year over year—the fastest since May 2023—and core inflation at 3.3%; monthly gains were 0.4% overall and 0.2% excluding food and energy. The war in Iran has disrupted energy markets, complicating price pressures and prompting more Fed officials to consider rate hikes to tame inflation, even as growth was revised downward and consumer spending cooled. The Fed’s leadership transition to Kevin Warsh adds to expectations that policy could tighten next year.
April’s core PCE rose 0.2% to 3.3% year over year, with the broader PCE up 0.4% to 3.8%, while Q1 GDP was revised to 1.6% annualized and consumer spending rose 0.5% in April. The data suggest inflation remains elevated but cooling, keeping the Fed on hold for now, with markets pricing potential rate moves in early next year.
March CPI rose 0.9% to 3.3% year over year, led by a 21.2% spike in gasoline and a 10.9% jump in energy from the Iran conflict; core CPI gained 0.2% for the month and 2.6% annually, signaling contained underlying inflation, with pockets of price declines in medical care, personal care, and used cars. Services excluding energy rose 0.2% and shelter 0.3%. Energy pressures eased in April after a U.S.–Iran cease-fire, and markets expect the Fed to remain patient while watching the broader inflation path toward its target.
February core PCE rose 3% and headline inflation 2.8%, while consumer spending fell 0.1% and personal income rose 0.4%. GDP for Q4 was revised down to 0.5% growth (down from 0.7%), driven by weaker investment and lower real final sales. The report suggests stagflation pressures even before the Iran conflict boosts energy prices, with Fed officials expected to keep rates on hold as inflation remains above target.
Eurozone inflation slowed to 1.7% in January per Eurostat flash data, with core inflation at 2.2%. The readings support the ECB keeping its 2% policy rate steady for now, with little chance of near-term cuts, though some analysts warn policy could shift if risks evolve, including a possible hike later (potentially in 2027).
U.S. Treasuries rallied after December's core inflation rose 0.2% month-on-month and 2.6% year-on-year, slightly below expectations, driving the 10-year yield down to about 4.175% (hit 4.156% intraday) while the 2-year slid to roughly 3.528% and the 30-year to 4.832%. Markets price in two 25-basis-point Fed cuts this year beginning in June as inflation trends decline and the labor market slows, though larger policy moves depend on ongoing data and the DOJ investigation into Powell’s renovations, which he says could influence the central bank’s decisions.
Inflation unexpectedly slowed in November with the consumer price index rising 2.7% annually, and core inflation at 2.6%, but analysts warn that data gaps prevent declaring victory for the White House.
The US inflation gauge remained steady in July at 2.6%, with core inflation slightly rising to 2.9%, indicating persistent inflation above the Fed's 2% target. Consumer spending increased significantly, and incomes rose, supporting the likelihood of a rate cut by the Fed next month, despite political pressure from President Trump to lower interest rates.
Core inflation in the US rose to 2.9% in July, the highest since February, driven by service prices and a slight increase in overall inflation, prompting expectations of potential interest rate cuts by the Federal Reserve amid mixed signals from the labor market and consumer spending.
Japan's core inflation rate slightly cooled to 3.1% in July but remained above the BOJ's 2% target, with rice prices easing after a surge earlier in the year. Despite economic growth of 0.3% in Q2, trade sluggishness and declining exports highlight ongoing economic challenges. Experts suggest the BOJ is behind the curve in raising interest rates to combat inflation.
Japan's core inflation eased to 3.3% in June from 3.7%, driven by a slowdown in rice price increases, but overall inflation remains above the BOJ's 2% target, with ongoing economic uncertainties including potential tariffs and political elections.
Rice prices in Japan more than doubled in May, increasing by 101.7% year over year, driven by rising inflation and government measures, while core inflation reached its highest since January 2023 at 3.7%, impacting household spending and economic outlooks.
In the eurozone, annual inflation eased to 2.4 percent in March, nearing the European Central Bank's 2 percent target, with core inflation dropping to 2.9 percent. This supports the possibility of future interest rate cuts, although analysts believe the central bank will wait for more evidence of the cooling trend before taking action. In the United States, inflation has also cooled, prompting caution from the Federal Reserve on potential interest rate cuts, while the Bank of England has maintained relatively high rates amid signs of moderating inflation in Britain.