PCE Inflation Topped 4% in May as Spending Surged, Keeping Fed Hike on the Table

Headline U.S. PCE inflation topped 4% in May 2026 while consumer spending rose 0.7%, Reuters reported June 25. The combination left a further Federal Reserve rate hike on the table. Economists estimate core PCE cooled to 3.3% year-on-year in June from 3.4% in May, per Reuters July 14 — still 100 basis points above the Fed's 2% target.