US inflation cools in May, boosting hopes of Fed rate cut

WASHINGTON – US monthly inflation was unchanged in May as a modest increase in the cost of services was offset by the largest drop in goods prices in six months, drawing the Federal Reserve closer to start cutting US interest rates later this year.

The flat reading in the personal consumption expenditures price index last month followed an unrevised 0.3 per cent gain in April, the Commerce Department's Bureau of Economic Analysis said. It was the first time in six months that PCE inflation was unchanged. Goods prices fell 0.4pc, the biggest drop since November.

In the 12 months through May, the PCE price index increased 2.6pc after advancing 2.7pc in April. Last month's inflation readings were in line with economists' expectations. Stocks on Wall Street were trading largely higher. The dollar was little changed against a basket of currencies. US Treasury prices were mixed.Excluding the volatile food and energy components, the PCE price index edged up 0.1pc last month, the smallest gain since November. That followed an upwardly revised 0.3pc rise in April.

US Interest Rates Fed Rate Cut US Consumer Spending PCE Price Index Personal Consumption Expenditures PCE

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