The Federal Reserve's preferred inflation tracker shows cooling prices. Here's the impact on rates.
CBS5 days
Fed's Preferred Inflation Gauge Falls to Three-Year Low
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The Facts
The US Commerce Department said on Friday that the core personal consumption expenditures (PCE) price index, a gauge closely tracked by the Federal Reserve, increased just a seasonally adjusted 0.1% from April to May.
This marks the lowest increase in the index since 2021, with the PCE now up 2.6% from a year ago. Last month, the reading was 2.7%.
The Spin
Republican narrative
Bidenomics has devastated the US economy, creating an inflation problem that the Biden administration has no clue how to solve. The latest data on the PCE index shows inflation over 3% — well above the official 2% target — for 39 straight months now. Ever since Biden took office, Americans have seen prices skyrocketing and real wages falling.
Democratic narrative
It's certain that Biden inherited low rates of inflation when he entered office, but that was largely due to the pandemic effect on the economy. Then, once life returned to normal, prices soared amid severe shortages of goods and labor. Now, as the PCE shows, the Biden administration is successfully bringing inflation sustainably back to the 2% target.