The Fed’s preferred inflation gauge cooled in May to its slowest annual pace in two years, in a sign that the central bank’s ratꦇe hikes are having their desired effect in cooling price growth.

The 澳洲幸运5官方开奖结果体彩网:Personal Co൲nsumption Expenditures🙈 (PCE) Price Index rose just 0.1% in May and was up 3.8% from the same period last year, the 澳洲幸运5官方开奖结果体彩网:Bureau of Economic Analysis (BEA) reported Friday. That is the lowest annual rate in two years, in a sign that inflati🐓on is slowing.

澳洲幸运5官方开奖结果体彩网:Core prices, which exclude volatile food and energy costs, were up 0.3% from a month earlier, or 4.6% year-over-year, also a slowdown from April’s 4.7% rate. The Fed targets a 2% annual rate of core inflation.

Price Gains by Category

By category, prices for g🌺oods rose just 0.1% in May, while those for services increased 0.3%. On an annual basis, they were up 1.1% and 5.3%, respectively, in a ꦯsign that services inflation continued to outpace goods inflation.

Falling energy prices helped drive the overall index lower in May. Energy costs decreased 3.9% from the previous month and were 13.4% lower compared to a year ago. Food prices gained slightly, rising 0.1%, and were 5.8% higher compared to May of last year.

Savings Rate Holds Steady

The 澳洲幸运5官方开奖结果体彩网:personal savings rate, wಌhich measures the percentage of household♕s’ disposable income that is saved rather than spent or invested, held steady at 4.6%. It’s rebounded in recent months from a near-record low of 2.7% last summer, when the highest inflation in four decades strained household budgets.

Implications for Fed Policy

The slowdown in the pace of inflation is a sign that the Fed's rate hikes are having their desired effect, which could prompt a more dovish stance from Fed policymakers. Still, inflation remains well above the central bank's 2% target, and traders are forecasting an 87% probability of another rate hike by 25 澳洲幸运5官方开奖结果体彩网:basis points (bps) at the Fed's next policy meeting in July, according to CME Group.