More on the Feds favorite gauge of inflation

• June 30, 2017
• realestatelife

The meager increase in spending took place against a backdrop of slowing inflation. The PCE index, the Federal Reserve’s preferred inflation gauge, fell 0.1% to mark the second decline in three months. What’s more, the 12-month rate of inflation tapered off to 1.4% in May from 1.7% in the prior month and a five-year high of 2.1% as recently as four months ago. The slowdown in inflation could give the Fed more to chew over as it considers how fast to raise U.S. interest rates. The central bank would like to see inflation hew close to 2%, but the sudden deceleration appears to have confounded them. Americans aren’t doing all that badly, though. The recent dip in inflation boosted real disposable income by 0.6% in May, the biggest gain since the end of 2012. Instead of spending their gains, Americans chose to sock them away instead. The savings rate jumped to an eight-month high of 5.5% from 5.1%