Core PCE, the Fed's preferred measure of inflation, grew 1.5% over last year.
Economists were expecting core PCE, which measures prices paid for consumer goods excluding food and energy, to climb 1.5% year-over-year.
On a monthly basis, core PCE grew 0.2%, which was in line with expectations.
PCE differs from the consumer price index, or CPI, report in a few ways and is typically lower than the CPI.
Last week, the May CPI report showed inflation climbed 2.1% year-over-year, and 0.4% month-over-month.
Personal income increased 0.4%, in line with expectations. Personal spending, however, grew 0.2%, below the 0.4% increase that was expected.
The May price index increased 1.8% year-over-year which was in line with expectations.
Since last week's CPI report, inflation has come to the fore as a major part of the discussion about where the economy is headed. The Federal Reserve says that it aims for 2% inflation and full employment, but inflation has long undershot the Fed's target.
Following the report, Ian Shepherdson at Pantheon Macro said, "In one line: Real spending on track for just 1.6% in Q2."Personal income rose 0.4% in May, as expected. Nominal spending rose only 0.2%, below the consensus, 0.4%, The core PCE deflator rose 0.2%, in line with consensus. With the headline deflator up 0.2%, unfavorable rounding meant real spending dipped 0.1%; disappointing and due to a surprise 0.2% drop in services spending; utilities plunged 6.8%, much more than implied by the 0.8% dip in utility output; will rebound. Still, even assuming a 0.3% rebound in total June spending, we now look for only a 1.6% annualized gain in Q2, down from our previous 2.5% forecast."
This chart from the BEA shows recent PCE readings.
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