Core Inflation Hits 3.4% in May 2026: Fed’s Preferred Gauge Reaches Highest Level Since 2023

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Inflation remained a key concern in May 2026 as the latest Personal Consumption Expenditures, or PCE, report showed underlying price pressures continuing to rise. Headline PCE climbed 4.1% year over year—the fastest pace since April 2023—while the Core PCE, which excludes volatile food and energy prices, increased 3.4%, marking the highest reading in several years. Economists point to energy costs, housing, and financial services as the main contributors to May’s gains. Geopolitical tensions earlier in the month, particularly related to Iran, added upward pressure to oil prices, which in turn