#USMayPCEInflationRisesTo4.1%HighestIn3Years


US PCE Inflation Rises to 4.1% in May – Highest Level in Three Years

On June 25, the US Commerce Department announced that the PCE price index for May rose 4.1% year-on-year. This was the highest level seen since April 2023, surpassing the 3.8% increase in April.

Core PCE inflation (excluding food and energy) rose 3.4% year-on-year, reaching its highest level since October 2023.

The main reason for the rise in inflation was attributed to the conflict in the Middle East driving up energy prices. Although a ceasefire has been signed between the US and Iran, inflation is expected to remain high for some time.

Following the PCE data, expectations strengthened in the markets that the Fed may raise interest rates in July. As a result:

* The dollar index rose to 101.52, reaching its highest level in about a year.
* Gold prices fell to their lowest levels in about seven months.

The data showed renewed price pressures in the U.S., increasing the likelihood that the Fed will continue with tighter monetary policy; this supported the dollar while putting pressure on gold.
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