(Reuters) -The U.S. Commerce Department said on Friday its Personal Consumption Expenditures Price Index gained 0.1% in May, matching the rise in April and in line with the consensus estimate in a Reuters poll of economists.
In the 12 months through May, PCE inflation increased 2.3% after climbing 2.2% in April.
Stripping out the volatile food and energy components, the PCE Price Index increased 0.2% last month. That followed a 0.1% rise in the so-called core PCE inflation in April.
In the 12 months through May, core inflation advanced 2.7% after rising 2.6% in April.
The Federal Reserve tracks the PCE price measures for its 2% inflation target. The central bank last week left its benchmark overnight interest rate in the 4.25%-4.50% range, where it has been since December.
The S&P 500 and Nasdaq Composite indexes hit record highs moments after the PCE data was released.
Yields on two-year U.S. Treasuries pared gains after the data showed a decline in consumer spending.
COMMENTS:
OLIVER PURSCHE, SENIOR VICE PRESIDENT, ADVISOR, WEALTHSPIRE ADVISORS, WESTPORT, CONNECTICUT:
“The big takeaway is inflation is going to continue to be a concern for the Fed and be a key driver in interest rate policy, so if anything it creates a little bit more doubt in whether the Fed will lower rates as early as July.”
PETER CARDILLO, CHIEF MARKET ECONOMIST, SPARTAN CAPITAL SECURITIES, NEW YORK:
“Personal income is disappointing.
We were looking for an increase of about 0.3%, so now it’s negative. We were looking for a weak personal spending number, but again negative. These two indicators raise the possibility that the economy has slowed in the second quarter and may be headed for negative economic activity.”
“On the inflation front, there were really no surprises with the exception of core (PCE), and it came in a little bit higher than expected.”
“I think the real worry here is personal income and spending moving lower.
All signs point to a weakening economy, with a possibility that the economy has already fallen into a technical recession.”
IAN LYNGEN, HEAD OF U.S. RATES STRATEGY, BMO CAPITAL MARKETS, NEW YORK:
“Personal spending surprised on the downside at -0.1% MoM in May vs.
+0.2% MoM prior and +0.1% MoM expected. The Treasury market is taking direction from the consumption figures over the inflation data – a notable tone shift that implies growth concerns are mounting.”
(Compiled by the Global Finance & Markets Breaking News team.
Editing by Paul Simao and Mark Potter)
