US core PCE inflation hits 3.4% in May, highest since late 2023

The hotter-than-expected reading complicates the Federal Reserve's path to rate cuts, with markets likely to reassess the timing of easing.

By Handelsavisen Newsroom · Automated 2026-06-25 12:36 UTC · 1 min read

The US core personal consumption expenditures (PCE) price index rose to an annual rate of 3.4% in May, marking the highest level since October 2023.

The figure represents a significant acceleration in underlying price pressures, defying expectations for a continued cooling trend.

1% annual increase, according to the Dow Jones consensus, but the core measure’s rebound signals persistent inflationary headwinds.

The headline PCE index was expected to show a 4.1% annual increase, according to the Dow Jones consensus, but the core measure’s rebound signals persistent inflationary headwinds.

This acceleration in core inflation is likely to weigh on market sentiment, particularly in rate-sensitive assets.

Investors are expected to recalibrate their expectations for Federal Reserve policy, with the hotter data reducing the probability of near-term rate cuts.

The yield curve may steepen as short-term rates remain anchored by policy uncertainty, while long-term yields adjust to the revised inflation outlook.