Americans are getting more bad news as new inflation numbers spell trouble for their wallets.
The U.S. Bureau of Economic Analysis (BEA) released key data from June on Friday, and the news isn’t good. The Federal Reserve’s preferred inflation gauge showed the personal consumption expenditures (PCE) price index “increased 4.0 percent from one year ago, reflecting increases in both goods and services” as “energy prices increased 24.2 percent while food prices increased 0.9 percent.”
When calculated without food and energy, “the PCE price index for June increased 3.5 percent from one year ago” according to the BEA, and that jump is raising eyebrows as the index’s biggest move since 1991.
US Core PCE inflation rises to 3.5%, its highest level since 1991.
“We will not raise interest rates pre-emptively because we fear the possible onset of inflation. We will wait for evidence of actual inflation or other imbalances." – Fed Chair J. Powell
— Charlie Bilello (@charliebilello) July 30, 2021
The PCE price index’s now second-highest jump was in May of this year when it rose 3.4 percent, suggesting that despite the Biden administration’s claims that inflation is a temporary problem, inflation is still getting worse month by month.
June’s increased inflation “more than wiped out income gains during the month,” explained Diane Swonk — an advisor to the Federal Reserve and chief economist at Grant Thornton — invalidating part of President Biden’s whispered appeal to “pay them more.” Because, as any Econ 101 student can explain, an increase in pay means nothing when inflation drives up the prices of goods and services.
On Thursday, the Commerce Department reported that the U.S. economy grew significantly less than expected in the second quarter, only 6.5% compared to the predicted 8.4%.