Washington, Jul 30 (FN Bureau) The core Personal Consumption Expenditures (PCE) price index, an inflation gauge closely followed by the Federal Reserve, increased at its fastest rate in three decades in the year up to the month of June, US Commerce Department data revealed on Friday. The PCE price index increased by 3.5 percent year-on-year in June, a notch above the 3.4 percent annual increase in May, and represents the fastest increase in inflation since 1991, the Commerce Department data showed.
On Wednesday, Federal Reserve Chairman Jerome Powell said price pressures in the United States could run higher and more persistent in the near term than forecast as the economy adjusts to bottlenecks caused by the coronavirus pandemic measures. The Federal Reserve has a long-term inflation target of 2 percent per annum. The US economy grew by an annualized rate of 6.4 percent in the first quarter of 2021, after a 3.5 percent contraction for all of 2020 due to shutdowns and other restrictive coronavirus pandemic measures.
The Federal Reserve has said it envisions a 6.5 percent expansion for all of this year, although some officials at the central bank have more ambitious expectations and forecasting growth of up to 7 percent. The problem the Federal Reserve encounters is an increasing rate of inflation as prices of almost all commodities have soared from the lows of the pandemic.