U.S. inflation pressures persist despite oil’s post-truce drop

A preliminary ceasefire deal in the U.S.-Iran war has helped push oil prices sharply lower, easing gasoline costs and potentially taking pressure off airfares and shipping. But underlying inflation has shown limited improvement, and forecasters expect May core PCE inflation to rise to a 3.4% annual pace, the highest since 2023, with overall PCE at 4.1% year over year. The outlook suggests the Federal Reserve may need to keep interest rates higher for longer, delaying any policy pivot.