An inflation gauge that the Federal Reserve uses as its primary barometer jumped to its highest 12-month gain in more than 40 years in June, the Bureau of Economic Analysis reported Friday.
The personal consumption expenditures price index rose 6.8%, the biggest 12-month move since the 6.9% increase in January 1982. The index rose 1% from May, tying its biggest monthly gain since February 1981.
Excluding food and energy, so-called core PCE increased 4.8% from a year ago, up one-tenth of a percentage point from May but off the recent high of 5.3% hit in February. On a monthly basis, core was up 0.6%, its biggest monthly gain since April 2021.
Both core readings were 0.1 percentage point above the Dow Jones estimates.
Fed officials generally focus on core inflation, but have turned their attention recently to the headline numbers as well, as food and fuel prices have soared in 2022.
The central bank has been using a recipe of rate increases and a reduction in asset holdings to bring down prices that have soared to their highest levels since the Reagan administration and have helped cool consumer spending.
The BEA release also showed that personal consumption expenditures increased 1.1% for the month, above the 0.9% estimate and owing largely to the surge in prices. Real spending adjusted for inflation increased just 0.1% as consumers barely kept up with inflation. Personal income rose 0.6%, topping the 0.5% estimate, but disposable income adjusted for inflation fell 0.3%.
There was other bad inflation news.
The employment cost index, another figure Fed policymakers follow closely, rose 1.3% in the second quarter. That represented a slight decline from the 1.4% gain in the previous quarter, but was ahead of the 1.1% estimate. Further, the 5.1% increase on a 12-month basis marked a record for a data series that goes back to the first quarter of 2002.
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Source: Economy - cnbc.com
