Inflation measure closely watched by the Fed rises 2.5% in June
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An inflation measure closely watched by the Federal Reserve eased slightly in June, even as high prices continued to weigh on millions of Americans.
The personal consumption expenditures (PCE) index showed that consumer prices rose 0.1% from the previous month, according to the Labor Department. On an annual basis, prices climbed 2.5% – down slightly from the 2.6% reading recorded the previous month.
The figures were both in line with estimates from economists surveyed by LSEG.
«Overall, it’s been a good week for the Fed,» said Chris Larkin, managing director of trading and investing at E*Trade. «The economy appears to be on solid ground, and PCE inflation essentially remained steady. But a rate cut next week remains a longshot.»
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A view of grocery store in Washington, DC on February 14, 2024. (Photo by Mostafa Bassim/Anadolu via Getty Image / Getty Images)
Prices for services increased 0.2% for the month and remain up 3.9% from the same time last year. The cost of goods also rose 0.1% on a monthly basis, despite a 2.1% drop in energy prices, according to the report. Goods prices are down 0.2% when compared with last year.
When excluding food and energy, core prices climbed 0.2% from the previous month and 2.6% from the previous year. Both of those figures are slightly higher than estimates.
While the Fed is targeting the PCE headline figure as it tries to wrestle consumer prices back to 2%, Chair Jerome Powell previously told reporters that core data is actually a better indicator of inflation.
Both the core and headline numbers point to inflation that is slowly returning to the Fed's preferred
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