Inflation rose three-tenths of a percentage point to 2.6% for the year ending in June, the Bureau of Labor Statistics reported Thursday in an update to the Federal Reserve’s preferred gauge.
Economists expected inflation in the personal consumption expenditures index to tick up to 2.5% from the month before.
The rise in inflation suggests that the Fed will have to continue working to bring down prices and that inflation could be a lingering problem, even as President Donald Trump pushes for the Fed to cut interest rates.
The Fed’s goal is 2% annual inflation.
On a month-to-month basis, inflation was 0.3%.
Core inflation, which strips out volatile food and energy prices, rose to 2.8% on an annual basis. Core inflation was 0.3% on a monthly basis.
The PCE inflation readings lag the more closely watched consumer price index reports. The latest CPI report showed that inflation rose slightly to 2.7% for June.
Overshadowing the inflation reports is the Fed, which once again opted to hold interest rates steady this week despite pressure from Trump to cut. If inflation starts falling more, it could push the Fed to start to cut rates. But if inflation remains too high, it could have the opposite effect.
FED HOLDS INTEREST RATES STEADY, BUCKING TRUMP PRESSURE
The labor market is still holding up despite the higher interest rates. The economy again beat expectations in June and added 147,000 jobs. The unemployment rate fell slightly to 4.2%.
Also, economic output has been up, according to the most recent reading. U.S. GDP expanded at a 3% annual rate in the second quarter, the Bureau of Economic Analysis reported on Wednesday morning ahead of the Fed decision.
