That’s how much the Federal Reserve’s preferred measure of inflation increased between June 2020 and last month—the biggest leap in three decades.
The personal consumption expenditures index excluding volatile food and energy prices—also called core PCE—has increased for four straight months now, after it accelerated to 3.5% in June from 3.4% in May, according to data released Friday by the Bureau of Labor Statistics. June’s jump is the largest year-over-year increase in core PCE since 1991.
With readings now well above the Federal Reserve’s long-term inflation target of 2%, there’s an ongoing debate about high inflation and the higher prices consumers are paying at the cash register. Are they due simply to short-lived growing pains following the economy’s reopening, or is a cycle starting where higher prices and higher wages will cause inflation to intensify and become stickier than the Fed expects?
The central bank, which can help defuse price increases by raising benchmark interest rates, acknowledged the higher inflation this week but is taking a wait-and-see approach. The Fed has repeatedly said the trend is temporary and will go away once issues, like supply bottlenecks causing a shortage of materials, resolve themselves.
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