Dallas Fed May PCE price index +1.4% m/m annualized vs +2.7% prior

The Dallas and Cleveland PCE remix data illustrates why Fed officials and markets are feeling better about the pricing picture.

• One month annualized trimmed mean 1.4% vs 2.7% prior (lowest this year)
• Six month annualized 3.0% vs 3.1% prior
• 12-month 2.8% vs 2.9% prior

Digging through the numbers, some drivers of inflation:

• Prescription drugs
• Tobacco
• Spectator sports
• Hospitals
• Used trucks

Some drivers of disinflation:

• Computer software and accessories
• Gasoline
• Air transport
• Financial services fees
• Women’s and girls clothing

One thing that wasn’t trimmed out was rent, which was up 4.8% annualized and still remains a problematic part of the inflation picture.