An inflation indicator used as a guideline by the Federal Reserve rose 3.5% in June, a sharp acceleration that was nonetheless in line with Wall Street’s expectations, the Department of Commerce reported on Friday.
The consumer spending price index, excluding food and energy, should rise 3.6% as the US economy experienced its highest inflationary pressures in more than a decade.
This increase was slightly above the 3.4% increase in May and represents the largest increase since July 1991.
Fed officials said they expect the rise in inflation to be temporary as it comes mostly from industries sensitive to the economic reopening, as well as supply chain bottlenecks and other issues that are likely to go away. The central bank is aiming for 2% inflation target, although officials are willing to temporarily tolerate higher levels as the economy tries to return to full employment.
The core PCE index rose 0.4% m / m, which was below the Dow Jones estimate of 0.6%, suggesting that inflationary pressures may at least ease somewhat.
Personal income and expense numbers were better than expected, however, as the consumers who were provided with stimulus money kept the economic recovery going.
Revenue increased 0.1%, better than estimate for a 0.2% decrease, while expenses increased 1% against a forecast of 0.7%.
Employment inflation also continued to rise.
Personnel costs increased 0.7% in the three months ended June, while wages and salaries increased 0.9%. For the year, compensation costs increased 2.9% from 2.7% a year earlier, according to a separate Labor Department report released on Friday.
On the price inflation front, the PCE index including food and energy rose 4% year-over-year, the largest increase since July 2008, just before the worst of the financial crisis hit. Energy prices rose by 24.2% and food by 0.9%.
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