FED’S KEY INFLATION GAUGE UP 6.3% IN MAY

WASHINGTON » A measure of inflation that is closely tracked by the Federal Reserve jumped 6.3% in May from a year earlier, unchanged from its level in April.

Thursday’s report from the Commerce Department provided the latest evidence that painfully high inflation is pressuring American households and inflicting particular harm on low-income families and people of color.

The report also said that consumer spending rose at a sluggish 0.2% rate from April to May. Consumer spending is beginning to weaken in the face of high inflation. But it’s still helping fuel inflation itself, especially as demand grows for services ranging from airline tickets and hotel rooms to restaurant meals and new and used autos.

“It should really come as no surprise that U.S. consumers are paring their spending due to the high costs of, well, almost everything,” Jennifer Lee, senior economist at BMO Capital Markets, wrote in a research note. After adjusting for inflation, she noted, consumer spending actually fell 0.4% from April to May.

On a month-to-month basis, Thursday’s report showed, prices rose 0.6% from April to May, up from the 0.2% increase from March to April.

Chronically high inflation has become a leading threat to the economy and a political hazard for President Joe Biden and Democrats as midterm elections near. Seventynine percent of U.S. adults describe the economy as poor, according to a new survey from The Associated Press-NORC Center for Public Affairs Research. Inflation is eclipsing the healthy 3.6% unemployment rate as a focal point for Americans who are struggling, in particular, with high gasoline and food prices.

In response, the Fed has embarked on a series of aggressive interest rate hikes that are intended to slow growth by making borrowing more expensive but that also risk causing a recession. Two weeks ago, the Fed raised its key rate by threequarters of a point — its largest hike in nearly three decades — and signaled more large rate increases to come.

The Fed tends to monitor Thursday’s inflation gauge, called the personal consumption expenditures price index, even more closely it does the government’s better-known consumer price index. While the components of the two indexes differ — CPI tends to weigh gasoline and housing costs more heavily and to show higher inflation — the two gauges tell the same basic story: Inflation is running dangerously hot.