Chart of the Day: Inflation Continues to Rise in May

The PCE inflation rate jumped again in May:

The core PCE rate, which excludes food and energy, is now above 2 percent for the first time since…15 months ago. So maybe this means there really is some inflationary pressure in the economy, or maybe it doesn’t mean very much at all. It will take the rest of the year to find out. In the meantime, however, this will confirm the Fed in its plan to continue raising interest rates steadily. I suppose I can’t blame them at this point, although given that the average core PCE over the past five years is only 1.9 percent, I still wish they’d be more willing to tolerate a higher upside value for a little longer.

Actually, I wish they’d been more willing to engineer a higher upside back in 2009-12, but they either couldn’t or wouldn’t. At this point, the economy is back to normal enough that tolerating only a smallish upside probably makes sense again.