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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

Two top Fed officials retire amid criticism over investment activities

Photo: Liu Jie/Xinhua via Getty Images

Two top Federal Reserve officials are stepping down after facing backlash for their investment activities.

Why it matters: Boston Fed President Eric Rosengren and Dallas Fed President Robert Kaplan have been embroiled in controversy since it was disclosed that the two owned assets sensitive to the monetary policy they were helping shape in 2020.

5 mins ago - World

Scoop: Ukraine tells senators post-invasion sanctions are no help

Zelensky. Photo: Johanna Geron/POOL/AFP via Getty Images

Ukrainian President Volodymyr Zelensky told U.S. senators visiting Kyiv this week that waiting to impose sanctions on Russia until after an invasion is of no use to Ukraine, according to four sources familiar with the discussions.

Why it matters: The Senate is currently working on a major sanctions package to deter Russia from attacking Ukraine. Democrats and Republicans are united in their support for Ukraine, but divided over whether it would be more effective to sanction Russia now to signal resolve, or hold up the threat of future sanctions to demonstrate the high costs of an invasion.

Starbucks drops worker vaccine or test requirement after SCOTUS ruling

Photo: Jakub Porzycki/NurPhoto via Getty Images

Starbucks has dropped plans to require that U.S. workers get the COVID vaccine or submit to weekly testing, the company announced Tuesday in a memo to employees.

Why it matters: The company's decision comes in response to the Supreme Court's ruling last week to block the Biden administration's COVID-19 vaccine-or-test requirement for large employers.