Key Fed inflation gauge rises to three-year high in May after gas prices peaked
Summary
The Federal Reserve’s preferred inflation measure rose to its highest level in three years in May due to higher gas prices and costs for computer parts used in AI technology. Inflation reached 4.1% over the past year, pushing the Fed to keep interest rates steady while some experts think rates might rise later this year.Key Facts
- Inflation increased 4.1% in May compared to one year earlier, the largest rise since April 2023.
- Monthly inflation was 0.4% in May, the same as April, down from 0.7% in March.
- Rising gas prices and more expensive computer chips helped drive up inflation.
- The Federal Reserve has kept interest rates steady this year after planning rate cuts in January.
- New Fed chair Kevin Warsh confirmed the goal to reduce inflation to 2% but did not specify new actions.
- Some economists predict the Fed might raise interest rates again this year.
- Gas prices peaked near $4.50 a gallon in May before falling to about $3.92, still over 20% higher than last year.
- Consumer spending and incomes rose slightly after adjusting for inflation in May.
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