High gas prices pushed annual inflation to the highest level in three years, according to May data released by the Commerce Department on Thursday.
The Federal Reserve’s preferred inflation gauge, the Personal Consumption Expenditures price index, rose to 4.1% in May from 3.8% in April. On a monthly basis it was unchanged at 0.4%.
But when stripping out gas and food prices, two of the most volatile components tracked, so-called core inflation rose at a much more muted annual rate of 3.4% from 3.3% in April.
Thursday’s data comes at a pivotal time for Fed policymakers, who have signaled patience on rate cuts amid lingering concerns about sticky inflation. Financial markets are currently pricing in the possibility of rate hikes later this year. President Donald Trump has repeatedly pushed for the central bank to cut rates — and recently appointed a new Fed chairman who is more aligned with his thinking — but stronger-than-expected inflation readings push the timeline for such a move further out.
This story is developing and will be updated.
