Higher gasoline prices pushed the Federal Reserve’s favored inflation index up in May at the fastest pace in three years, data from the Department of Commerce showed on Thursday.
The personal consumption expenditures price index climbed 4.1 percent last month from a year earlier, the largest year-over-year price increase since April 2023. Compared with the prior month, prices rose 0.4 percent.
Excluding food and energy, so-called core prices were up 3.4 percent from a year earlier. Core prices rose 0.3 percent from April.
Both the headline and core figures were in line with expectations.
Gasoline prices rose 6.5 percent in May. That followed a 5.5 percent increase in April and a 20.9 percent increase in March.
Durable goods prices were flat in May, anchored by falling prices for autos, household furniture, and appliances. Clothing and footwear prices were flat. Grocery prices rose just 0.1 percent.
Services prices climbed 0.5 percent. Transportation prices rose 0.8 percent, housing prices climbed 0.3 percent, and health care services rose 0.4 percent. Financial services and insurance prices rose 1.2 percent, largely reflecting gains in the stock market.
Despite the higher prices, consumer spending rose sharply. Household expenditures rose 0.7 percent from a month earlier, or 0.3 percent after adjusting for inflation. Personal incomes also rose 0.7 percent in May before inflation adjustment and 0.3 percent adjusted for higher prices.
In a separate report, the government said that the U.S. economy grew at an annualized 2.1 percent pace in the first quarter, a significant upgrade from the prior estimate of 1.6 percent. Economists had expected that estimate to remain unchanged.
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