The personal consumption expenditures price index, the Federal Reserve’s key inflation measure, increased just 0.1% for the month, putting the annual inflation rate at 2.1%, the lowest of 205. The monthly reading was in line with the Dow Jones consensus forecast while the annual level was 0.1 percentage point lower.
Consumer spending slowed sharply for the month, posting a 0.2% increase, but this is slightly slower than the 0.7% rate in March. A more cautious consumer mood is reflected in the personal savings rate, which jumped to 4.9%, up from 0.6 percentage point in March.
Personal income surged 0.8%, a slight increase from the prior month but well ahead of the forecast for 0.3%. Food prices fell 0.3% on the month while energy goods and services increased 0.5%.
The core inflation rate, excluding food and energy, was also at 0.1% for the month, though it was higher on an annual level at 2.5%. Central bank officials believe this is a better indicator of longer-term trends.
Markets showed little reaction to the news, with stock futures continuing to point lower and Treasury yields mixed. This is largely due to ongoing trade tensions between the US and other countries, which could impact inflation in the future.
Some economists worry that tariffs could spark another round of inflation, though historical data suggests their impact is often minimal. The Federal Reserve has been hesitant to move on interest rates as they await the longer-term impacts of the president’s trade policy.
In a recent statement, Fed Chair Jerome Powell indicated that decisions would be made free of political considerations, and no discussion was had about the future path of monetary policy during his meeting with President Trump.
Source: https://www.cnbc.com/2025/05/30