Key Inflation Gauge Inches Down But Remains Stuck In High Gear

'Inflation appears to be cooling, but it may be a mirage' economist Gregory Daco warns

Prices advertised outside of a grocery store in the Flatbush neighborhood of Brooklyn, New York City, on June 15, 2022. Spencer Platt/Getty Images

A key inflation gauge heavily relied on by the Federal Reserve when setting interest rates inched down in May but remained elevated near multi-decade highs at a level more than twice the central bank’s inflation target, suggesting the Fed’s fight to relieve price pressures will be drawn out.

The Fed’s preferred inflation gauge, the so-called core Personal Consumption Expenditures (PCE) price index, rose by 4.7 percent year-over-year in May, the Commerce Department reported on June 30.