WASHINGTON (AP) — The Federal Reserve’s preferred inflation gauge ticked slightly higher last month. Prices rose 2.6% in June compared with a year ago, the Commerce Department said Thursday, up from an annual pace of 2.4% in May. Excluding the volatile food and energy categories, prices rose 2.8% in the past year, the same as […]
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A key US inflation gauge rose slightly last month
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WASHINGTON (AP) — The Federal Reserve’s preferred inflation gauge ticked slightly higher last month.
Prices rose 2.6% in June compared with a year ago, the Commerce Department said Thursday, up from an annual pace of 2.4% in May. Excluding the volatile food and energy categories, prices rose 2.8% in the past year, the same as the previous month, which was revised higher. The figures are above the Fed’s 2% goal.
The uptick in prices helps explain the central bank’s reluctance to cut its key interest rate this week. On Wednesday, the Fed left its key rate unchanged at 4.3%, and Chair Fed Powell suggested it could take months for the central bank to determine whether the import duties will cause just a one-time rise in prices or a more persistent increase in inflation.
There were some signs of splits in the Fed’s ranks: Governors Christopher Waller and Michelle Bowman voted to reduce borrowing costs, while nine officials, including Powell, favored standing pat. It is the first time in more than three decades that two of the seven Washington-based governors have dissented. One official, Governor Adriana Kugler, was absent and didn’t vote.
On a monthly basis, prices ticked up 0.3% from May to June, while core prices also rose 0.3%. Both figures are higher than consistent with the 2% target.
The government’s measure of gas prices jumped 0.9% from May to June, while grocery costs rose 0.3%. Many longer-lasting goods that are heavily imported saw clear price increases, with furniture prices up 1.3% just last month, appliances up 1.9%, and computers up 1.4%.
The cost of some services fell dramatically last month, offsetting the price pressures from goods. Air fares dropped 0.7% from May to June, while the cost of hotel rooms plunged 3.6% just in one month.
Thursday’s report also showed that consumer spending rose 0.3% from May to June, a modest rise that suggests Americans are still spending, if cautiously. Adjusted for inflation, the increase was just 0.1%, the government said.