Low price growth appears more persistent than the Federal Reserve accounted for on Friday as the central bank's preferred measure of US inflation fell for the third month in a row in May.
Core personal consumption expenditures, a price index the Fed favours over the better known consumer price index (CPI), rose at an annual rate of 1.4% in May, down from 1.5% in April.
As recently as February, the core PCE index was at 1.8%, just 0.2 percentage points below the Fed's target rate of 2%. By comparison, May's CPI rose at an annual rate of 1.9%.
The headline index, which unlike the core includes volatile energy and food prices, fell sharply to 1.4% from 1.7% in April. Analysts had expected a drop to 1.5%.
Personal income, however, rose 0.4% month on month, up from a 0.3% rise in April and beating analysts' forecasts of another 0.3% reading.
Low inflation transitory
Income growth has been tepid in the US and signs of a pick up will please the Fed, raising hopes that it will feed into price growth, confirming the central bank's belief that low inflation is "transitory".
In spite of the weak inflation reading, investors were a little more bullish on the dollar given the higher personal income reading.
The dollar index, a measure of the US unit against a basket of other currencies, rose 0.1% to 95.71.
Against the euro, it climbed 0.2% to $1.1422 and was 0.3% higher versus the pound at $1.2973.