US inflation fell sharply in May — Commerce Department

WASHINGTON — The US inflation measure most closely watched by the Federal Reserve declined sharply in May, official figures showed Friday, returning to a downward trend after a jump a month earlier.

The Federal Reserve recently announced it was pausing its aggressive campaign of 10 consecutive interest rate hikes to tackle inflation in order to give policymakers more time to assess the strength of the US economy.

The personal consumption expenditures (PCE) index measure of inflation declined to 3.8 per cent year-on-year in May, a significant drop from 4.3 per cent a month earlier, the Commerce Department said in a statement.

Much of the slowdown was due to a sharp drop in energy prices, and food prices to a lesser extent. 

But core PCE, excluding volatile food and energy prices, fell only slightly to an annual rate of 4.6 per cent from 4.7 per cent a month earlier, indicating that inflation remains stubborn in many areas. 

Services inflation remained high, while goods inflation rose by a much smaller amount. 

On a monthly basis, PCE rose by 0.1 percentage points, slightly above the median forecast of economists surveyed by Briefing.com.