Tariffs show mild impact on inflation but consumers more wary

By the numbers: The Personal Consumption Expenditures price index rose by 0.1% in May, the same pace as the prior month, the Commerce Department said.

• From the same month a year ago, the PCE price index rose by 2.3% — up a tick from April.
• Excluding energy and food prices — the core measure that the Fed watches for underlying inflation pressures — the index rose 0.2%, up from 0.1% in May.
• From the same month a year ago, core PCE increased 2.7%, up from 2.6% in April.

Between the lines: The data came alongside new readings on consumer spending and income growth, both of which slowed relative to the prior month.

• Personal consumption expenditures fell by 0.3%, as consumers continued to pull back after strong spending in the spring. The drop in spending in May was largely a result of a drop-off in goods spending.
• Income growth, meanwhile, fell by 0.4% after surging by 0.7% in April. It comes as a spike in social benefits — for teachers, firefighters and police offers, related to recent legislation — wore off.

The bottom line: The data will do little to lift the fog for the Fed officials who are trying to suss out how trade is impacting inflation and the broader economy.

Editor's note: The headline of this story has been corrected to reflect there was a mild impact on inflation in May (not that inflation fell).