(TheRedWire.com) – In May, prices remained unchanged from April and increased by 2.6 percent compared to the previous year, as reported by the Commerce Department’s personal consumption expenditures (PCE) price index. Core PCE inflation, which excludes food and energy prices, saw a minimal rise of 0.1 percent from April to May, maintaining a 2.6 percent increase year over year.
In May there was an increase in consumer spending and incomes, while inflation flatlined. There was a 0.5 percent increase in disposable income, while consumer spending also grew by 0.2 percent in the last month.
The recent inflation data highlights the ongoing struggle of the Federal Reserve to mitigate price growth, a significant concern as the November election approaches. Former President Trump blamed President Biden for the current inflation during a presidential debate, contrasting it with the 1.4 percent inflation rate when Biden took office in January 2021. In June 2022 inflation peaked at 9.1 percent but it has now dropped to 3.3 percent annually as of May, according to the Labor Department’s Consumer Price Index (CPI).
The increase in prices occurred because of various reasons, including supply chain issues caused by the pandemic, and the effects of the Russian invasion of Ukraine. The country’s reopening after the pandemic also accelerated economic activity.
In response, the Federal Reserve raised interest rates to a 23-year high, increasing borrowing costs to cool the economy. The rates were expected to start being cut at the end of 2023, however, the high inflation rates have blocked that process.
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