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Economy — Business — Energy — Domestic Policy

What Drove America's Inflation To A Three-Year High

Core inflation, which excludes volatile food and energy prices, increased only slightly to 3.4% from 3.3%, suggesting underlying price pressures remained relatively contained

,   and  TIPP Staff
2 min read
Photo by Niconor Brown / Unsplash

Annual U.S. inflation climbed to 4.1% in May, its highest level in three years, largely because of higher gasoline prices, according to Commerce Department data reported by CNN.

The Federal Reserve's preferred inflation measure, the Personal Consumption Expenditures (PCE) price index, rose from 3.8% in April, while monthly inflation remained unchanged at 0.4%.

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Core inflation, which excludes volatile food and energy prices, increased only slightly to 3.4% from 3.3%, suggesting underlying price pressures remained relatively contained. The report said the figures were broadly in line with economists' expectations.

The latest data arrives as Federal Reserve officials remain cautious on interest rate cuts. According to the report, financial markets are increasingly pricing in the possibility of rate hikes later this year, even as President Donald Trump continues urging the central bank to lower borrowing costs.

Meanwhile, disposable income and consumer spending both rose faster than expected, indicating that household demand remained resilient despite elevated inflation.

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tippinsightsTIPP Staff

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