WASHINGTON — A measure of prices that is closely tracked by the Federal Reserve rose 2.6 percent in May, a slight decline from April but above the 2 percent inflation target set by the central bank.

At the same time, Friday’s Commerce Department report showed that consumer prices were flat between May and April, the mildest such performance in more than four years, suggesting that inflation pressures in the American economy could be easing.

Excluding volatile food and energy prices, so-called core inflation rose 0.1 percent between May and April, the smallest increase since the spring of 2020, when the pandemic erupted and shut down the economy. And compared with a year earlier, core prices were up 2.6 percent in May, the lowest increase in more than three years.

On one hand, prices for physical goods actually fell 0.4 percent between May and April. Gasoline prices dropped 3.4 percent, furniture prices 1 percent, and the prices of recreational goods and vehicles 1.6 percent. On the other hand, prices for services, which include items like restaurant meals and airline fares, ticked up 0.2 percent.

The latest figures will likely be welcomed by the Fed’s policymakers, who have said they need to feel confident that inflation is slowing sustainably toward their 2 percent target before they’d start cutting interest rates. Rate cuts by the Fed, which most economists think could start in September, would lead eventually to lower borrowing rates for consumers and businesses.

“If the trend we saw this month continues consistently for another two months, the Fed may finally have the confidence necessary for a rate cut in September,” the head of American economic research at Fitch Ratings, Olu Sonola, wrote in a research note.

The Fed raised its benchmark rate 11 times in 2022 and 2023 in its drive to curb the worst streak of inflation in four decades. Inflation did cool substantially from its peak in 2022. Still, average prices remain far above where they were before the pandemic, a source of frustration for many Americans and a potential threat to President Biden’s re-election bid.

Friday’s price figures added to signs that inflation pressures are continuing to ease, though more slowly than they did last year.

The Fed tends to favor the inflation gauge that the government issued Friday — the personal consumption expenditures price index — over the better-known consumer price index.

The PCE index tries to account for changes in how people shop when inflation jumps. It can capture when consumers switch from pricey national brands to cheaper store brands.

Like the PCE index, the latest consumer price index showed that inflation eased in May for a second straight month. It reinforced hopes that the acceleration of prices that occurred early this year has passed.

The much higher borrowing costs that followed the Fed’s rate hikes, which sent its key rate to a 23-year high, were widely expected to tip the nation into recession. Instead, the economy has kept growing, and employers have kept hiring.

Lately, though, the economy’s momentum has appeared to flag, with higher rates seeming to weaken the ability of some consumers to keep spending freely.

On Thursday, the government reported that the economy expanded at a 1.4 percent annual pace between March and January, the slowest quarterly growth since 2022. Consumer spending, the main engine of the economy, grew at a tepid 1.5 percent annual rate.

Friday’s report also showed that consumer spending and incomes both picked up in May, encouraging signs for the economy. Adjusted for inflation, spending by consumers — the principal driver of the American economy — rose 0.3 percent last month after having dropped 0.1 percent in April.

After-tax income, also adjusted for inflation, rose 0.5 percent. That was the biggest gain since September 2020.

Associated Press