The Commerce Department released key consumer price inflation data on Friday, which met economist predictions for May.
According to the report, the personal consumption expenditures (PCE) price index remained unchanged in May after a 0.3 percent rise in April, aligning with expectations. The core PCE price index, which excludes food and energy prices, saw a 0.1 percent increase in May following an upwardly revised 0.3 percent rise in April. This matched economist forecasts of a 0.1 percent uptick, compared to the originally reported 0.2 percent increase for the previous month.
The annual growth rates for both the PCE price index and the core PCE price index decelerated to 2.6 percent from 2.7 percent and 2.8 percent respectively, again meeting estimates.
Kathy Bostjancic, Nationwide Chief Economist, remarked, "We anticipate that the welcomed cooling in inflation and reduced economic activity will prompt the Fed to cut interest rates starting in September, lowering the fed funds rate by a total of 50 basis points by year-end. We believe this will help achieve a soft landing for the economy."
These inflation metrics, preferred by the Federal Reserve, were part of the Commerce Department's report on personal income and spending.
Personal income grew by 0.5 percent in May, up from a 0.3 percent increase in April, surpassing economists' prediction of a 0.4 percent rise. Disposable personal income, which is personal income after taxes, also rose by 0.5 percent following a 0.3 percent increase in April.
Meanwhile, personal spending increased by 0.2 percent in May after a revised 0.1 percent gain in April, falling just short of economists' expectations of a 0.3 percent rise compared to the originally reported 0.2 percent increase for the prior month.
When adjusted for price changes, personal spending rose by 0.3 percent in May after a slight decline of 0.1 percent in April.
With income outpacing spending, the personal saving rate as a percentage of disposable income grew to 3.9 percent in May from 3.7 percent in April.
