U.S. inflation remained steady in May, with the personal consumption expenditures (PCE) index showing no change compared to the previous month, according to the Labor Department [cc40d257]. On an annual basis, prices climbed 2.6%, in line with expectations. Core prices, which exclude food and energy components, increased by 0.1% from the previous month and are up 2.6% from a year ago, the slowest annual rate since March 2021 [cc40d257] [3b79b6bb]. The Federal Reserve has been closely monitoring inflation as it considers whether to cut interest rates. The latest data on inflation comes as consumer spending in the US increased by just 0.2% in May, below the estimated 0.3% [cc40d257]. The Fed has been contemplating when to begin lowering interest rates, and market pricing currently indicates that the central bank will cut rates twice this year, with the first reduction expected in September [cc40d257]. High inflation has created financial pressures for many households, particularly low-income Americans [cc40d257].
In Finland, consumer prices rose by 0.6% in June compared to the same month last year, according to data from Statistics Finland. Prices for alcoholic beverages and tobacco increased by 4.3% from last year, while clothing and footwear rose by 3.4%. However, food and non-alcoholic beverage prices fell by 0.4% last month, year-on-year. Education costs saw the biggest year-on-year price spike, rising by 7.9% in June. The inflation rate in May was 0.5% [f96c581d].
The European Central Bank's current interest rate level is still considered too high for Finland, according to economist Roope Ohlsbom. Ohlsbom suggests that interest rates should be lowered rapidly to stimulate demand in the Finnish economy [f96c581d].