Core inflation rate hit 3.4% in May, highest since October 2023, Fed's preferred gauge shows
Source: CNBC
Published Thu, Jun 25 2026 8:32 AM EDT Updated 20 Min Ago
The Federal Reserve’s primary price gauge rose at its highest level since 2023, reinforcing the central bank’s recent tough talk on inflation.
Excluding food and energy, the personal consumption expenditures price index showed a 3.4% annual rate after rising 0.3% for the month, both in line with Dow Jones consensus. The core reading was the highest since October 2023.
For the all-items reading, the PCE index showed inflation running at a seasonally adjusted 4.1% annual rate, the highest since April 2023, according to a Commerce Department report Thursday. On a monthly basis, PCE accelerated 0.4%. The annual level was in line with the Dow Jones consensus estimate while the monthly reading was 0.1 percentage point below.
While Fed officials look at both headline and core rates, they generally consider the latter a better measure of long-run trends, particularly in light of this year’s inflation surge that was driven largely by an acceleration in energy prices tied to the Iran war that have slowly been seeping into other parts of the economy.
Read more: https://www.cnbc.com/2026/06/25/pce-inflation-report-may-2026-.html
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People's incomes rose 0.7% in May; spending grew 0.7%. Both figures are in current dollars.
https://bea.gov/data/income-saving/personal-income
8:32 AM · Jun 25, 2026
Article updated.
Previous articles -
The Federal Reserve's primary price gauge rose at its highest core level since 2023, reinforcing the central bank's recent tough talk on inflation.
Excluding food and energy, the personal consumption expenditures price index showed a 3.4% annual rate after rising 0.3% for the month, both in line with Dow Jones consensus. The core reading was the highest since October 2023.
For the all-items reading, the PCE index showed inflation running at a seasonally adjusted 4.1% annual rate, the highest since April 2023, according to a Commerce Department report Thursday. On a monthly basis, PCE accelerated 0.4%. The annual level was in line with the Dow Jones consensus estimate while the monthly reading was 0.1 percentage point below.
While Fed officials look at both headline and core rates, they generally consider the latter a better measure of long-run trends, particularly in light of this year's inflation surge that was driven largely by an acceleration in energy prices tied to the Iran war that have slowly been seeping into other parts of the economy.
The Federal Reserve's primary price gauge rose at its highest core level since 2023, reinforcing the central bank's recent tough talk on inflation.
The personal consumption expenditures price index showed inflation running at a seasonally adjusted 4.1% annual rate, the highest since April 2023, according to a Commerce Department report Thursday. On a monthly basis, PCE accelerated 0.4%. The annual level was in line with the Dow Jones consensus estimate while the monthly reading was 0.1 percentage point below.
Stripping out food and energy, core PCE showed a 3.4% annual rate after rising 0.3% for the month, both in line with consensus. The core reading was the highest since October 2023.
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Original article -
The personal consumption expenditures price index was expected to show a 4.1% annual increase, according to the Dow Jones consensus.
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Horizontal red lines drawn at the Fed's 2% target
PCE May month-over-month: +0.4%;; 12 months: 4.1%
(Actually the month-over-month was +0.44983% before round-off, so it was just a tiny bit below where it would have rounded up to +0.5%)
CORE PCE: May month-over-month: +0.3%;; 12 months: 3.4%,
6/25/26
SOURCE URLS: 6/25/26 release: https://www.bea.gov/data/income-saving/personal-income
. . . CURRENT RELEASE - https://www.bea.gov/news/2026/personal-income-and-outlays-may-2026
. . . PCE DATA SERIES: https://fred.stlouisfed.org/series/PCEPI
. . . CORE PCE DATA SERIES: https://fred.stlouisfed.org/data/PCEPILFE
Percent increases, seasonally adjusted numbers, ANNUALIZED, over the past month, the past 3 months, and the past 12 months
1 mo 3 mo 12mo
---- ---- ----
5.5% 6.3% 4.1% Regular PCE (includes food & energy)
3.9% 3.5% 3.4% Core PCE (does not have food nor energy
2.0% 2.0% 2.0% Federal Reserve Target
REGULAR "ALL ITEMS" PCE
CORE PCE (Does Not Include Food Nor Energy)
(These are calculated using the actual index values, as are my graphs)
As usual, I prefer to present annualized figures so they can be compared to the Fed's target and to different-length time periods
The CORE PCE is the Federal Reserve's favorite gauge for forecasting FUTURE inflation.
