US core PCE inflation accelerated to 2.7% yoy in May, above expectations of 2.6% yoy and up from an upwardly revised 2.6% yoy in April. The Headline PCE index also edged higher from 2.2% yoy to 2.3% yoy as expected. While the inflation print highlights persistent price pressures—particularly in core categories—consumption data painted a weaker picture.
Personal income unexpectedly dropped -0.4% mom, a steep miss versus forecasts for a 0.2% gain. Personal spending fell -0.1% mom against an expected 0.2% mom increase. The fall in spending was driven by a notable USD 49.2B pullback in goods purchases, only partially offset by a USD 19.9B rise in services spending.
