Key facts
- US inflation rose to 4.1% year-over-year in May, matching expectations.
- Higher energy prices were the primary driver of the inflation increase.
- Consumer spending rose 0.7% in May.
- The dollar eased from a 13-month high after the data release.
The dollar eased from a 13-month high on Thursday as U.S. economic data, including a surge in inflation, slightly dented expectations for Federal Reserve rate cuts this year. The Commerce Department reported that the personal consumption expenditures price index rose 4.1% in the 12 months through May, matching forecasts. Consumer spending, however, remained resilient, increasing by 0.7% during the same period. The higher inflation figures, attributed to rising energy prices amid geopolitical tensions, have fueled concerns that the Federal Reserve might need to maintain its restrictive monetary policy or even consider further rate hikes. Market participants are closely watching the Fed's next moves, with some institutions already pushing back their predictions for rate cuts.