U.S. personal income rises in May as core PCE inflation reaches highest level since October 2023
U.S. consumer spending and personal income increase in May, while inflation accelerates further above the Federal Reserve's 2 percent target. Core personal consumption expenditures inflation reaches 3.41 percent year over year, its highest level since October 2023, as savings remain unchanged and first-quarter GDP growth is revised at 2.09 percent.
Highlights
- Headline PCE inflation rises 0.45 percent in May, while core PCE climbs 0.32 percent, the latter reaching its highest level since October 2023.
- Real PCE, measuring consumer spending, increases 0.26 percent or $43.82 billion in May, with goods up 0.46 percent and services up 0.17 percent.
- Personal income grows 0.68 percent or $181.58 billion in May, and real GDP increases 2.09 percent in 2026 Q1, reaching $31.866 trillion.
May spending and inflation data
As reported by the Joint Economic Committee, headline personal consumption expenditures price index inflation rises 0.45 percent from April to May, above the 0.40 percent increase recorded from March to April. Core PCE inflation, which excludes food and energy, increases 0.32 percent in the month, up from 0.24 percent in the prior period.Consumer spending also moves higher in May. Real PCE increases 0.26 percent, or $43.82 billion, with spending on services up 0.17 percent, or $18.98 billion, and spending on goods up 0.46 percent, or $26.28 billion. The nominal personal savings rate remains steady at 3.0 percent, with no net monthly change.
On a year-over-year basis, headline PCE inflation climbs to 4.07 percent in May 2026 from 3.77 percent in April. Core PCE inflation stands at 3.41 percent, marking its highest reading since October 2023.
Income growth and broader economic signals
Personal income also strengthens in May, rising 0.68 percent month over month, or $181.58 billion. Real disposable personal income per capita increases 0.23 percent, indicating that after-tax income grows faster than prices during the month.The committee also releases its GDP update for the first quarter of 2026, using the third estimate. Real GDP growth from 2025 Q4 to 2026 Q1 increases by 2.09 percent, while current-dollar GDP rises 5.76 percent, or $443.195 billion, bringing the size of the U.S. economy to $31.866 trillion.
In our earlier coverage of May 2026 PCE inflation and income-and-spending data, we noted that price pressures remained elevated, with headline PCE inflation around 4.1% year over year and core PCE near 3.4%. We also highlighted that personal income and consumer spending both rose about 0.7% in May while the personal saving rate held at 3.0%, signaling resilient demand even as inflation stayed sticky.
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