US core PCE price index rose by 2.6% year-on-year in May, hitting a three-year low

On June 28, the U.S. Department of Commerce released data showing that the month-on-month growth rate of the U.S. PCE price index in May fell from 0.3% in April to 0%, the lowest since November 2023, in line with market expectations; the year-on-year growth rate also fell from 2.7% in the previous month to 2.6%, meeting expectations.

More importantly, excluding the volatile food and energy prices, the year-on-year growth rate of the core PCE price index in May hit the lowest level since March 2021, dropping from 2.8% in April to 2.6%, also in line with expectations. March 2021 was an important time point. At that time, the core PCE price index exceeded the 2% inflation target set by the Federal Reserve for the first time in this inflation cycle.

At the same time, the month-on-month growth rate of the core PCE price index in May was 0.1%, the lowest since December 2023.

Previous analysis has indicated that if the forecast for core PCE prices comes true, this will be a milestone for the Federal Reserve in its fight against inflation.

After the data was released, the U.S. dollar index fell by about 14 points in the short term, now at 105.82. U.S. stock futures showed little volatility, with Nasdaq 100 index futures maintaining a gain of about 0.5%. The yield on the 10-year U.S. Treasury bond fell in the short term, now at 4.291%. Spot gold showed little volatility, now at $2333.75 per ounce.

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