Federal Reserve's preferred inflation gauge shows price pressures easing further
A measure of prices that's closely tracked by the Federal Reserve suggests that inflation pressures in the U.S. economy are continuing to ease
WASHINGTON — A measure of prices that is closely tracked by the Federal Reserve suggests that inflation pressures in the U.S. economy are continuing to ease.
Friday's Commerce Department report showed that consumer prices were flat from April to May, the mildest such performance in more than four years. Measured from a year earlier, prices rose 2.6% last month, slightly less than in April.
Excluding volatile food and energy prices, so-called core inflation rose 0.1% from April to May, the smallest increase since the spring of 2020, when the pandemic erupted and shut down the economy. Compared with a year earlier, core prices were up 2.6% in May, the lowest increase in more than three years.
Prices for physical goods, such as appliances and furniture, actually fell 0.4% from April to May. Prices for services, which include items like restaurant meals and airline fares, ticked up 0.2%.
The latest figures will likely be welcomed by the Fed's policymakers, who have said they need to feel confident that inflation is slowing sustainably toward their 2% target before they'd start cutting interest rates. Rate cuts by the Fed, which most economists think could start in September, would lead eventually to lower borrowing rates for consumers and businesses.
«If the trend we saw this month continues consistently for another two months, the Fed may finally have the confidence necessary for a rate cut in September,” Olu Sonola, head of U.S. economic research at Fitch Ratings wrote in a research note.
The Fed raised its benchmark rate 11 times in 2022 and 2023 in its drive to curb the worst
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