Here’s the hard data on the core PCE price index for May 2025—the Federal Reserve’s preferred inflation gauge (excluding volatile food and energy):
May 2025 vs. April 2025 (MoM):
↑ 0.2 percent
May 2025 vs. May 2024 (YoY):
↑ 2.7 percent
Release date: June 27, 2025 at 8:30 a.m. EDT (BEA)
What it means:
Inflation is stubbornly holding above the Fed’s 2 percent annual target on a core basis, even as headline prices cool. A 0.2 percent monthly uptick—unchanged from April’s pace—keeps the 12-month core rate firmly at 2.7 percent.
Why it matters:
• With core PCE running above target, the Fed is unlikely to cut rates at its next meeting.
• Tariff-related pressures are building in the background; once those pass-through effects hit, we could see another lift in inflation.
• Consumers are already pulling back (personal spending fell 0.1 percent in May), so real-world demand may restrain price gains—but only modestly.
Bottom line: don’t expect rate relief any time soon. The Fed will stay on data watch, eyeing how consumers weather both elevated core inflation and cooling spending.