Fed’s preferred inflation gauge rises sharply in June
Make us a preferred source
Make us a preferred source on Google
The news: The Federal Reserve’s preferred measure of underlying inflation increased in June at one of the fastest paces this year, while consumer spending barely rose, according to Bureau of Economic Analysis data.
The numbers: The core personal consumption expenditures (PCE) price index, which excludes food and energy, rose 0.3% since May and 2.8% from a year earlier.
The overall PCE index also rose 0.3% in June and 2.6% annually.
Inflation-adjusted consumer spending edged up after declining in May, reflecting a rebound in non-durable goods, while durable goods purchases fell for a third month and services spending remained tame.
The context: The figures show the tug and pull dividing Fed officials, who non-unanimously left interest rates unchanged for a fifth straight meeting amid concerns over stalled inflation progress and a softening labour market.
Inflation pressures are rising partly due to import tariffs being passed to consumers, with goods like clothing, furnishings and toys already increasing in price.
Consumer spending has also slowed, reflecting caution amid weak wage growth and flat disposable income.
The sources: US Bureau of Economic Analysis, Bloomberg
