Even with post-war energy relief, US inflation is still getting worse

Inflationary pressures are broadening in the US, increasing the dilemma facing new Federal Reserve Board chief Kevin Warsh. PCE inflation data for May showed headline and core figures both accelerated to the highest since 2023.

CEIC’s proprietary weekly nowcasts show even more cause for concern. Oil prices are at their lowest since the outbreak of the Middle East war. But while our headline nowcast reflects that cease-fire relief, our core PCE nowcast (which strips out food and energy prices) has kept ticking higher since the end of May.

The goods component of core PCE is now contributing meaningfully to inflation alongside services. On the upside for Warsh, his hawkish stance might have already helped push down longer-term inflation expectations – both in the markets and widely watched sentiment surveys.

CEIC users can read the full story here.