Key inflation indicator up 3.5% year over year in June for fastest gain since 1991
PUBLISHED FRI, JUL 30 2021 8:32 AM EDT UPDATED 3 MIN AGO
-- An inflation gauge followed closely by the Federal Reserve increased 3.5% year over year in June, slightly below the 3.6% estimate.
-- Consumer spending rose 1%, faster than expected as personal income also increased.
-- Labor costs rose as well, with compensation rising 2.9% from a year earlier.
An inflation indicator that the Federal Reserve uses as its key guide rose 3.5% in June, a sharp acceleration that was nonetheless right around Wall Street expectations, the Commerce Department reported Friday.
The personal consumption expenditures price index, which excludes food and energy, was expected to increase 3.6% at a time when the U.S. economy has seen its highest inflation pressures in more than a decade. ... That gain was slightly ahead of the 3.4% May increase and represents the biggest move since July 1991.
Fed officials have said they expect the inflation surge to be transitory as it has come largely from industries sensitive to the economic reopening, as well supply chain bottlenecks and other issues likely to fade. The central bank targets 2% as its desired inflation goal, though officials are willing to tolerate higher levels temporarily as the economy tries to get back to full employment.
The core PCE index rose 0.4% month over month, which was below the 0.6% Dow Jones estimate, indicating that inflationary pressures may be starting to ebb at least a bit. ... Personal income and spending numbers, however, were better than expectations as consumers flush with stimulus cash kept the economic rebound going.
Income rose 0.1%, better than the estimate for a 0.2% decline, while spending increased 1% against a 0.7% forecast. ... Employment inflation also continued to increase.
Read more: https://www.cnbc.com/2021/07/30/key-inf ... imate.html
BIG LETTERS: FROM JUNE 2020 TO JUNE 2021. ON AN ANNUAL BASIS. THIS IS NOT AN INCREASE IN JUNE 2021.
Hat tip, another site.
Earlier, kind of misleading LBN news snippet:
The Fed's favorite price index rose 4 percent.
https://www.nytimes.com/2021/07/30/busi ... rcent.html
Daily Business Briefing
The Fed's favorite price index rose 4 percent.
By Jeanna Smialek
July 30, 2021, 8:37 a.m. ET
The Federal Reserve's favorite inflation index climbed by 4 percent in June compared with a year earlier, as a rebounding economy and soaring demand for goods helped to push prices higher.
The gains in the Personal Consumption Expenditures inflation index were the fastest since 2008, but in line with economists expectations. That rapid pace is not expected to last, but how much and how quickly it will fade is the economic question of the moment.
Inflation has been surprisingly rapid this year. Economists knew prices would post strong increases as they were measured against weak figures from 2020, when costs for many common purchases slumped. But the jump has been more intense than most were expecting.
That's partly because supply bottlenecks have emerged across America's reopening economy. Computer ship shortages pushed up the prices of electronics and delayed automobile production, causing used car prices to surge. Employers are struggling to hire back workers fast enough to meet returning demand, and prices for restaurant meals and some other services have begun to move higher.
June's personal consumption expenditure price data may be a high point in the inflationary saga. Last year's low figures are fading from the data, and many economists expect the rapid pace of price gains to begin to moderate in the coming months.
On a monthly basis, inflation climbed 0.5 percent from May to June, slightly less than the 0.6 percent economists in a Bloomberg survey had expected. The core inflation index, which strips out volatile food and fuel, climbed 3.5 percent over the past year.
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From the source:
https://www.bea.gov/news/2021/personal- ... ual-update
EMBARGOED UNTIL RELEASE AT 8:30 A.M. EDT, FRIDAY, JULY 30, 2021
Personal Income and Outlays, June 2021 and Annual Update
Personal income increased $26.1 billion (0.1 percent) in June according to estimates released today by the Bureau of Economic Analysis (tables 3 and 5). Disposable personal income (DPI) decreased $2.6 billion (less than 0.1 percent) and personal consumption expenditures (PCE) increased $155.4 billion (1.0 percent).
Real DPI decreased 0.5 percent in June and Real PCE increased 0.5 percent; goods decreased 0.2 percent and services increased 0.8 percent (tables 5 and 7). The PCE price index increased 0.5 percent. Excluding food and energy, the PCE price index increased 0.4 percent (table 9).