Jun 30, 2022 - Economy & Business

Key inflation gauge remains high in May

People shop for frozen food at a Walmart store
Photo: Frederic J. Brown/AFP via Getty Images

Inflation stayed steep in May, though the pace of cost spikes is showing some signs of leveling off, according to the personal consumption expenditures price index, the inflation gauge favored by the Federal Reserve.

Why it matters: By this measure, inflation is rising at the fastest clip in decades as the Fed moves aggressively to contain it.

By the numbers: Prices for goods and services rose 0.6% last month, or 6.3% from the previous year, the Commerce Department said on Thursday. In April, the figures were 0.2% and 6.3%, respectively.

  • Excluding volatile food and energy costs, prices jumped 0.3%, the same pace as the prior three months. Compared to a year ago, this so-called core personal consumption expenditures index rose 4.7%. (In April, it was 4.9%).

Details: Consumers boosted spending by 0.2%, a slowdown from the 0.6% rise in April.

  • The personal saving rate rose to 5.4% in May, up from the 5.2% rate in the prior month.

Where it stands: Fed officials are keeping a close eye on the month-to-month changes in inflation measures for signs of progress as they attempt to tackle soaring costs.

  • A hot inflation print released earlier this month factored in to the central bank's decision to raise interest rates by a more-than-expected 75 basis points.
  • That measure of price gains, the consumer price index, showed inflation running at an 8.6% annual rate in May.
  • That and the personal consumption expenditures index are official government inflation measures, though each is compiled differently.
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