AFMC - U.S. Inflation Relief And Consumer Cooldown Boosts Chances Of Rate Cuts

2024-06-29 03:10:00 ET

Summary

• The Federal Reserve’s favoured measure of inflation came in at just 0.1% MoM, offering hope that the first quarter “hot” prints are firmly in the rear-view mirror.
• US consumer spending is also slowing, with first quarter growth set to come in at less than half the rate recorded in second half 2023.
• Both inflation and spending suggest tight monetary policy is cooling the economy and constraining price increases.

By James Knightley

Inflation relief with a "low" 0.1%

The May personal income and spending report has offered some encouragement that inflation pressures are easing once again, after coming in far too hot in the first three months of the year. The core personal consumer expenditure deflator, a broader measure of inflation pressures than CPI that the Fed prefers to focus on, came in at 0.1%MoM/2.6%YoY. This was expected given the read-through from components within the CPI and PPI reports, but after plenty of upside surprises this year, it is a relief. The headline measure (including food & energy) was 0.0%MoM/2.6%YoY, as expected....

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