The Fed's favorite inflation measure hits its target for the first time in six years

(Reuters) – US consumer prices accelerated between May and May, with underlying inflation reaching the 2% target of the Federal Reserve for the first time in six years.

Consumer prices measured by the Consumer Price Index (PCE) rose 0.2% after a similar gain in April, the Commerce Department announced Friday. During the 12-month period ending in May, the PCE price index jumped 2.3%.

This is the largest gain since March 2012 and followed a 2.0% increase in April. The PCE price index excluding volatile food and energy components rose 0.2% for a sixth consecutive month.

This pushed up the increase in core PCE price index by 2.0% year-over-year, the largest since April 2012. The annual PCE core price index increased by 1.8% in April. The basic PCE index is the Fed's favorite inflation measure.

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The US central bank has raised its interest rates for the second time this year and expects two further rate hikes by the end of 2018.

L & # 39; inflation acceleration continued despite a moderation in consumer spending. The government said consumer spending, which accounts for more than two-thirds of US economic activity, rose 0.2% last month. April data were revised downward to show that spending rose 0.5% instead of the previously announced 0.6% jump.

Economists polled by Reuters had forecast spending up 0.4% in May. Expenditure was held back by lower spending on household utilities. Purchases of durable goods such as motor vehicles edged up 0.1% last month. Purchases of non-durable goods increased 0.4%. Spending on services increased by 0.1%.

After adjustment for inflation, consumer spending remained unchanged in May after rising 0.3% in the previous month. Growth in consumer spending fell at an annualized rate of 0.9% in the first quarter, the slowest pace in almost five years, after rising 4.0% in the fourth quarter.

In May, personal income rose 0.4% after gaining 0.2% in the previous month. Wages increased by 0.3%. Savings reached $ 482.0 billion last month, compared with $ 448.0 billion in April. The savings rate went from 3.0% in April to 3.2%.

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(Report by Lucia Mutikani, edited by Andrea Ricci)