US inflation has risen to 2.6% for the first time since December, with President Trump’s tariffs contributing to higher prices. The Personal Consumption Expenditures (PCE) measure, preferred by the Federal Reserve, showed a year-over-year increase of 2.6%, up from 2.4% in May.
The rise is attributed to tariffs imposed on imported goods and services, particularly in the furniture, appliances, and computers sectors. However, prices for some services, such as air fares and hotel rooms, have decreased. Consumer spending rose 0.3% in June, but adjusted for inflation, the increase was only 0.1%.
The Federal Reserve kept interest rates steady, citing elevated uncertainty over the economy’s outlook and inflation remaining above its 2% target. The central bank’s chairman, Jerome Powell, warned that it may take months to determine whether the tariffs will lead to a persistent rise in inflation.
Experts say the higher-than-expected inflation data may reduce the likelihood of a rate cut at the Fed’s September meeting. “The above-target rise in core prices in June, upward revisions to previous months’ data and the sharp rise in core goods inflation will do little to ease the Fed’s concerns about tariff-driven inflation,” said Harry Chambers, assistant economist at Capital Economics.
Overall, the PCE report suggests that the US economy is still grappling with price pressures, despite a solid showing in the second quarter.
Source: https://www.cbsnews.com/news/pce-report-today-inflation-june-federal-reserve