Fed’s Preferred Inflation Gauge Shows Price Pressures Easing

The latest reports indicate a gradual easing of inflation pressures in the U.S. economy, with consumer prices remaining flat from April to May. Core inflation, excluding volatile food and energy prices, saw a small increase, and prices for physical goods actually fell during this period. This trend may lead the Federal Reserve to consider rate cuts, potentially starting in September, which could positively impact borrowing rates for consumers and businesses. While inflation has cooled from its peak, average prices still remain elevated post-pandemic, posing challenges. The economy has shown resilience despite higher rates, but signs of flagging momentum warrant monitoring. The recent uptick in consumer spending and incomes in May offers encouraging signs for economic growth.