Core inflation rate rose to 2.7% in May, more than expected, Fed’s preferred gauge shows

Prices that consumers pay rose slightly in May, while the annual inflation rate moved further away from the Federal Reserve’s target, according to a Commerce Department report Friday.

The personal consumption expenditures price index, the Fed’s primary inflation reading, rose a seasonally adjusted 0.1% for the month, putting the annual inflation rate at 2.3%. Economists surveyed by Dow Jones had been looking for respective levels of 0.1% and 2.3%.

Excluding food and energy, core PCE posted respective readings of 0.2% and 2.7%, compared to estimates for 0.1% and 2.6%. Fed policymakers consider core to be a better measure of long-term trends because of historic volatility in the two categories.

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