Fed's preferred inflation gauge rises to 2.7% in May

The latest reading of the Federal Reserve's preferred inflation gauge showed price increases accelerated in May.

The core Personal Consumption Expenditures (PCE) price index — the Federal Reserve's preferred inflation gauge — rose by 2.7% year-on-year in May, compared to a 2.5% increase in April, above expectations of a 2.6% rise, official data released on Friday showed.

The headline PCE index — which includes volatile food and energy components — increased by 2.3% year-on-year last month, following a 2.1% rise in April, in line with forecasts.

On a monthly basis, the core PCE index rose by 0.2%, while the headline index edged up by 0.1%, according to the data.

The report also showed that personal consumption expenditures fell by $27.6 billion last month, with personal savings reaching around $1.01 trillion.

The data reflects a $19.9 billion decline in spending on services and a $49.2 billion drop in spending on goods.