Overview
- The U.S. Bureau of Economic Analysis reported Thursday that personal consumption rose 0.7% in May while the PCE price index climbed 0.4% for the month and 4.1% year‑over‑year with core PCE at 3.4%.
- Americans’ sentiment improved in June as gasoline prices fell with the University of Michigan’s final index rising to 49.5 and year‑ahead inflation expectations easing to about 4.6%.
- The ECB’s May Consumer Expectations Survey showed one‑year euro‑zone inflation expectations dropped to 3.5% while three‑ and five‑year expectations remained near target at 2.9% and 2.4%.
- The Bank of England held its Bank Rate at 3.75% in June citing lower short‑term household inflation expectations and easing energy costs, though policymakers flagged remaining uncertainty from the Middle East shock.
- The recent spike in energy costs tied to the Iran and Middle East conflict drove much of the headline inflation rise, and policymakers are watching wage growth and shipping through the Strait of Hormuz for signs that the shock will broaden into persistent higher inflation.