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Data: BEA via FRED Chart: Axios Visuals

The core PCE price index in May was increasing at the highest yearly rate since 1992. But this may be the top.

Why it matters: Core PCE, which was updated Friday, is the Federal Reserve's preferred measure of inflation. High inflation means your money is worth less, and it could force the Fed to tighten its easy monetary policy.

By the numbers: Core PCE rose to 3.4% in May from 3.1% in April.

  • It's currently above the Fed's target of an average 2% rate.

Yes, but: Core PCE rose by 0.5% on a monthly basis in May and down from 0.7% in April, suggesting price inflation may be decelerating.

  • And the Fed has argued elevated inflation has been driven by "temporary" factors like the low base effect from last year's drop-off due to the pandemic.

What they’re saying: "This should be the peak," according to a note from Pantheon Macroeconomics' Ian Shepherdson.

  • "The key question for the Fed ... is whether the spike in core inflation raises inflation expectations and whether employees have the power to translate higher inflation expectations into faster wage growth," he added.
  • Oxford Economics' Gregory Daco writes in a note that while he foresees "increased inflation stickiness, with core PCE inflation hovering around 3%" in the second half of the year, "we don’t foresee runaway inflation."

What to watch: The latest readings precede the summer months, where consumers are expected to spend more on services as they head out for vacation and trips — representing a much different stage of reopening not captured in May's data.

Go deeper

Sep 17, 2021 - Health

Retail sales increase despite low expectations from Delta

Data: FRED; Chart: Axios Visuals

Consumers defied expectations and shopped at an increasing rate amid a resurgence in COVID-19 cases.

Why it matters: Several measures of consumer confidence fell sharply in August, suggesting consumer spending could fall during the month. In fact, concerns about the Delta variant's impact on the economy had prominent Wall Street economists cutting their expectations for Q3 GDP growth.

Updated 2 hours ago - Science

Huge wildfire reaches edge of Sequoia National Park

A plume of smoke and flames rise into the air as the fire burns towards Moro Rock during the KNP Complex fire in the Sequoia National Park near Three Rivers, California, on Saturday. Photo: Patrick T. Fallon/AFP via Getty Images

Firefighters in Sequoia National Park were working into the night after two wildfires merged to reach the Giant Forest Saturday.

Why it matters: This forest contains over 2,000 giant sequoias, including the General Sherman Tree — the world's largest tree by volume. Park officials wrapped the redwoods in foil last week as the Paradise and Colony Fires, now known as the KNP Complex Fire, neared. Protection efforts appeared to be working overnight.

2 hours ago - World

Hong Kong holds first "patriots only" elections

Hong Kong Chief Executive Carrie Lam during a news conference last Monday. Photo: Lui Siu Wai/Xinhua via Getty Images

Hong Kong's elections to choose the city's Election Committee members opened to a select group of voters on Sunday, under a new "patriots only" system imposed by China's government.

Why it matters: All candidates running to be members of the electoral college have been "vetted" by Beijing, per Reuters. They will go on to choose the Asian financial hub's next leader, approved by China's government, and some of its legislature.