Federal Reserve’s favorite inflation measures – personal consumption expenditure, or PCE – high tick last month, indicating that President Trump’s tariffs are increasing some prices.
Prices Rose Compared to 2.6% a year ago in June, the Department of Commerce said on Thursday, at an annual speed of 2.4% in May. Except for volatile food and energy categories, prices rose 2.8% in the last one year, which was similar to the previous month, which was modified higher.
Statistics help clarify the cause of the central bank Its decision Wednesday to keep it Major interest rate stableFederal Reserve Chairman Jerome Powell stressed that inflation still remains above the target of 2% annual rate. Powell suggested that it may take months for the Central Bank to determine whether the President’s new import duties will increase prices by one time, or there will be a more frequent increase in inflation.
In an email comment, the head of the investment strategy in Global X, Scott Helfstein, said, “Fed received verification with slightly higher than inflation this morning.” “There are some evidence of tariff effects in inflation figures, but it remains modest. Health care, housing and utilities remain important sources in promoting utilities.”
On a monthly basis, prices were 0.3% from May to June, while core prices also increased by 0.3%. Both figures are higher than that of 2% target.
On Wednesday, Fed up his benchmark interest rate, which cited Advanced uncertainty On the country’s economic approach and inflation that exceeds its 2% annual target. The Central Bank cut the final rates in December 2024 before Shri Trump’s inauguration of January.
Mr. Trump is pressurizing Powell to cut rates, arguing that low rates have been justified as inflation remains and other nations are cutting their benchmark rates this year. Nevertheless, Most of the Fed’s 12-person Federal Open Market Committee, or FOMC, 12-Person Central Bank’s rate-setting panels voted on Wednesday to maintain rates in a range of 4.25% to 4.5%, although there were two dissatisfaction votes in favor of the cut.
An increase in PCE’s inflation figures may reduce the chances of cutting rate in the September meeting of Fed, said Harry Chambers, Assistant Economists of Capital Economics, an forecast firm.
Chambers said, “The above-targeted increase in main prices in June, upwards for previous months and rapid increase in core freight inflation will be very rare to reduce the fed’s concerns about tariff-driven inflation,” said the chambers.
High grocery and gas prices
The measurement of the government of gas prices increased by 0.9% from May to June, while the cost of grocery increased by 0.3%. Many long -lasting items that are heavy imported are seen in clear prices, last month only up to 1.3%furniture prices, up to 1.9%equipment, and computers up to 1.4%.
The cost of some services fell dramatically last month, causing some price pressure from the goods. Air fares declined by 0.7% from May to June, while the cost of hotel rooms declined by 3.6% in a month.
Thursday’s report also revealed that consumer expenses rose 0.3% from May to June, a slight increase that states that Americans are still spending carefully. Adjusted for inflation, the increase was only 0.1%, the government said.
Americans also saw a slight increase in income, which rose 0.3% last month, a reversal after a decline of 0.4% in May. Adjust to inflation and taxes, however, the income was flat in June.
Consumers have been alert throughout the year. On Wednesday, the government said that the economy Extended at 3% annual rate In the second quarter, one solid performance but one masked some red flags.
For example, consumer expenses increased at 1.4% speed at 1.4% speed, after a small profit of 0.5% in the first three months of the year. A sharp decline in imports in the April-June quarters, which, after the first quarter bounce, provided a large lift to calculate the US GDP government.
Earlier this month, the government said that its more closely seen consumer price index, its primary inflation measures, Stemed more in June Such as -the cost of heavy imported goods such as devices, furniture and toys increased.
