NEW YORK, June 27 (Xinhua) -- The United States continues to face inflationary pressures as the impacts of tariffs manifest gradually, according to the data issued by the U.S. Commerce Department on Friday.
The personal consumption expenditures (PCE) price index for May posted 0.1 percent of month-on-month growth in line with market expectation and that in the previous month. The index saw 2.3 percent of year-on-year increase in May while the growth rate in April was revised up from 2.1 percent to 2.2 percent.
Excluding food and energy, the core PCE price index in May saw 0.2 percent of month-on-month rise, higher than 0.1 percent in April and forecast consensus of 0.1 percent. The core inflation gauge for May increased by 2.7 percent from the same period of 2024, higher than forecast consensus of 2.6 percent. The growth rate of the core PCE price index for April was revised up to 2.6 percent from 2.5 percent.
The year-on-year growth of the PCE price index is still above the Federal Reserve's inflation target of 2 percent, though it's lower than that in the beginning of this year.
The Fed decided to keep the target range of federal funds unchanged in the latest monetary policy meeting ended June 18.
"The effects of tariffs will depend, among other things, on their ultimate level. Expectations of that level, and thus of the related economic effects, reached a peak in April and have since declined. Even so, increases in tariffs this year are likely to push up prices and weigh on economic activity," said Federal Reserve Chair Jerome Powell in his testimony before Congress on Tuesday and Wednesday.
Powell forecast 2.3 percent growth of the PCE price index and 2.6 percent of the core PCE price index in May from the same period of last year, respectively.
Powell expected the impacts of tariffs would be reflected in the summer, especially in the data for June and July.
The firm inflation data is likely to keep the Fed refraining from lowering interest rates in the near term.
