Fed Inflation Gauge: Tariff Price Hikes in June
Inflation Heats Up in June,Driven by Tariffs,PCE Data Shows
Key takeaways
Inflation accelerated in June according to the PCE price index. Prices rose 2.6% over the year,higher than the 2.4% annual price increase in May.
“Core” PCE prices rose 2.8%, the same as in may, above the Federal Reserve’s 2% annual goal.
* Tariffs are pushing up consumer prices for certain items, economists said.
Prices for goods rose in June as businesses passed the cost of tariffs on to customers, according to the Federal Reserve’s preferred measure of inflation.
Prices rose 2.6% in June compared to the year before, according to the Personal Consumption Expenditures price index.That was up from a 2.4% increase in May, and well above its recent low point in September, when annual inflation was 2.1%. “core” prices, which exclude the volatile prices for food and energy, rose 2.8% over the year, the same as in May.
Inflation measures are stubbornly above the Federal Reserve’s goal of a 2% annual rate. President Donald Trump’s wide-ranging import taxes, which he began imposing in February, have pushed prices up, according to analysis by several economists. The report echoed a resurgence of inflation shown in the Consumer Price Index, a separate inflation measure released earlier in July.
What Does the Data Mean For the Fed?
Stubborn inflation has also, indirectly, kept borrowing costs high on all kinds of loans.The Federal Reserve has kept its benchmark interest rate flat this year at a higher-than-usual level in an effort to discourage borrowing and spending and stamp out high inflation. the Fed pays especially close attention to PCE inflation, using the “core” PCE price index as its benchmark for whether inflation is running at the central bank’s target of a 2% annual rate.