Prices that consumers pay rose slightly in May, while the annual inflation rate edged further away from the Federal Reserve’s target, according to a Commerce Department report Friday.

The personal consumption expenditures price index, the Fed’s primary inflation reading, rose a seasonally adjusted 0.1% for the month, putting the annual inflation rate at 2.3%. Economists surveyed by Dow Jones had been looking for respective levels of 0.1% and 2.3%.

Excluding food and energy, core PCE posted respective readings of 0.2% and 2.7%, compared with estimates for 0.1% and 2.6%. Fed policymakers consider core to be a better measure of long-term trends because of historic volatility in the two categories. The annual rate was 0.1 percentage point ahead of the April reading.

The Fed targets inflation at 2%, a level where it has not been since early 2021.

Along with the inflation numbers, consumer spending and income showed further signs of weakening. Spending fell 0.1% for the month, compared with the estimate for an increase of 0.1%. Personal income declined 0.4%, against the forecast for a gain of 0.3%.

Markets had little reaction to the data, with stock market futures indicating a positive open on Wall Street while Treasury yields also rose.

“This morning’s news was consistent with other reports showing the economy gradually losing momentum in the second quarter, ahead of the brunt of tariff increases expected to wash ashore during the summer and early fall,” said Gary Schlossberg, market strategist at the Wells Fargo Investment Institute.

The report comes with the Fed contemplating its next move on interest rates. Schlossberg said the report helps “keep hopes alive” for a July rate cut, though he still sees such talk as “premature.”

Markets largely expect the central bank to remain on hold at its late July meeting. However, a few officials of late have been advocating a cut as long as inflation data shows muted pressures from the tariffs President Donald Trump has instituted since taking office in January.

Trump has been pushing the Fed to ease, insisting that inflation is low and the central bank can always switch gears if prices start moving higher again.

Fed Chair Jerome Powell, though, has advocated a more cautious approach, despite increasingly aggressive pressure from the president. Trump has been criticizing Powell on a regular basis lately, earlier this week calling him “stupid” and indicating he will name a successor soon.

Inflation pressures generally were muted in May.

Food prices increased 0.2%, but that was offset by a 1% decline in energy-related goods and services costs, including a 2.2% slide in gasoline and other energy goods. Shelter prices increased 0.3%.

Services prices have been responsible for most of the upward pressure on inflation, as they posted a 3.4% increase from a year ago. Goods have risen just 0.1%.