Core Inflation Rises More Than Expected

Prices that consumers pay rose slightly in May, while the annual inflation rate edged further away from the Federal Reserve’s target, according to a Commerce Department report Friday.

The personal consumption expenditures price index, the Fed’s primary inflation reading, rose a seasonally adjusted 0.1% for the month, putting the annual inflation rate at 2.3%. Economists surveyed by Dow Jones had been looking for respective levels of 0.1% and 2.3%.

Excluding food and energy, core PCE posted respective readings of 0.2% and 2.7%, compared with estimates for 0.1% and 2.6%. Fed policymakers consider core to be a better measure of long-term trends because of historic volatility in the two categories. The annual rate was 0.1 percentage point ahead of the April reading.

Along with the inflation numbers, consumer spending and income showed further signs of weakening. Spending fell 0.1% for the month, compared with the estimate for an increase of 0.1%. Personal income declined 0.4%, against the forecast for a gain of 0.3%.