A key inflation measure hits a three-year high

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4.5 • 1.4K Ratings

🗓️ 25 June 2026

⏱️ 8 minutes

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Summary

Core inflation rose to 3.4% in May, according to this morning's PCE report out from the Bureau of Economic Analysis. That's the highest since October 2023. Part of the rise is driven by service sector inflation, which should be more immune to shocks from tariffs and energy costs. We dig in. And later, now that Spirit Airlines has shut down, its bankruptcy estate is auctioning off its access to New York’s LaGuardia Airport.

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Transcript

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0:00.0	A key measure of inflation hits a three-year high.
0:05.2	From Marketplace in Washington, I'm Kimberly Adams.
0:08.2	Core inflation rose to 3.4% in May, the highest since October of 2023.
0:14.1	That's according to the latest PCE report out from the Bureau of Economic Analysis this morning.
0:19.5	Also moving markets, chipmaker,
0:21.4	Micron Technology, released its highly anticipated earnings yesterday after the bell, showing the
0:26.7	company's revenue quadrupled from the year prior. Diane Swank is the chief economist at the audit
0:32.3	tax and advisory firm, KPNG. Good morning, Diane. Good morning. The personal consumption expenditure price index,
0:40.0	fondly known as PCE, just came out this morning. Inflation has jumped to a three-year high.
0:46.3	What do you think is driving that? Energy has a much smaller weight in this index than the CPI,
0:52.5	and that was about 60% of the CPI increase for the month.
0:56.7	What we also saw was an increase in underlying service sector inflation.
1:01.4	This is something that the Federal Reserve has been watching very closely
1:05.2	because it means that we're starting to see service sector inflation,
1:10.5	which should be more immune to many of the
1:13.1	shocks that we're seeing out there, things like tariffs and energy prices. That's getting an extra
1:18.2	lift right now. And without that cooling, you cannot get back to price stability. We got an
1:24.4	announcement from Apple this morning that they are going to be raising prices of some consumer electronics driven by this just crazy demand for chips across so many industry sectors.
1:36.6	Can you talk about inflation from that lens?
1:38.7	This is really important because it's one of the ways that AI has a sequencing problem.
1:47.2	It is boosting costs up front because of the extraordinary demand for chips in data centers before it actually delivers in
1:53.2	terms of scaling for productivity growth to ameliate those increases. And I think that's really
	...

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