Core inflation rate hit 3.4% in May, highest since October 2023, Fed’s preferred gauge shows

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.