The Federal Reserve’s preferred inflation measure rose slightly in June, according to new data released Friday by the Commerce Department.
The personal consumption expenditures (PCE) price index rose 0.1% last month and is up 2.5% over the past year. Core PCE, which excludes more volatile food and energy prices, rose 0.2% in June and is up 2.6% from a year ago.
The latest inflation reading comes as the Federal Reserve is scheduled to meet next week. With inflation stubbornly above its 2% target, the central bank has kept interest rates unchanged in the 5.25% to 5.5% range for the past year.
Inflation has eased significantly after reaching a 40-year high in mid-2022. However, recent inflation data indicates that inflation progress has stalled, particularly in the first quarter of 2024.
Following several improvements in inflation measures in the second quarter, Fed Chairman Jerome Powell said earlier this month that he was increasingly confident that inflation was heading toward 2 percent on a sustained basis.
“The first quarter didn’t provide any additional confidence, but the three numbers in the second quarter certainly did provide some confidence,” Powell said in a speech to the Economic Club of Washington, D.C., in mid-July.
Another measure of inflation, the Consumer Price Index (CPI), has also shown signs of further easing in recent months, falling 0.1% in June, marking the first month-on-month decline in consumer prices since the pandemic began.
At the same time, the labor market appears to be cooling, raising hopes of an interest rate cut: The June jobs report showed the unemployment rate rose slightly to 4.1%, and the Labor Department sharply revised down job growth rates for April and May.
Despite moderating inflation and a cooling job market, the U.S. economy is holding up surprisingly well: Data released Thursday showed gross domestic product grew at a 2.8% annual rate in the second quarter, well above economists’ expectations.
