PCE Inflation Above 4% in May, Keeping Fed Hike in Play

U.S. PCE inflation topped 4% in May 2026 while consumer spending rose 0.7%, Reuters reported June 25. Core PCE (excluding food and energy) cooled to 3.3% year-on-year in June from 3.4% in May, per Reuters July 14 — still 100 basis points (one full percentage point) above the Fed's 2% target. A further rate hike remains possible.