Core Services, Big Inflation

This is not good.

 

The “core services” PCE price index jumped by 0.46% in May from April (+5.6% annualized, blue in the chart below). The six-month core services PCE price index jumped by 4.2% annualized, the worst since June 2024 (red).

Core services dominate consumer spending, and that’s where inflation has been accelerating for a year, after coming down from the surge in 2021 through early 2023. Core services are where inflation is tough to battle. A lot of these core services lack adequate competition that consumers can leverage, and once companies that sell these services are confident they have pricing power, they raise their prices, and consumers wail and gnash their teeth and pay them....

OK, so what are "core services"?

 Core services in cost-of-living typically include housing, food, healthcare, transportation, and taxes. These services represent essential expenses that individuals need to maintain a basic standard of living in a specific area...

Hmmmmm.