Business

The Fed’s favorite price index rose 4 percent.

The Fed’s favorite price index rose 4 percent.
Written by admin
The Fed’s favorite price index rose 4 percent.

The Fed’s favorite price index rose 4 percent.

The Federal Reserve’s preferred inflation index climbed 4% in June from a year earlier as the rebound in the economy and strong demand for goods helped push prices up.

The gains in the personal consumption expenditure inflation index were the fastest since 2008, but in line with economists’ expectations. This rapid pace should not last, but to what extent and how quickly it will fade is the economic question of the moment.

Inflation has been surprisingly rapid this year. Economists knew the prices would show big increases because they were measured against the weak 2020 numbers, when the costs of many everyday purchases plummeted. But the jump was more intense than expected.

This is in part because supply bottlenecks have arisen in the reopening US economy. Computer ship shortages have driven up electronics prices and delayed auto production, causing used car prices to soar. Employers are struggling to rehire workers quickly enough to meet the return demand, and prices for restaurant meals and some other services have started to rise.

June’s personal consumption expenditure price data could be a highlight of the inflationary saga. Last year’s lows are fading into the data, and many economists expect the rapid pace of price increases to begin to moderate in the coming months.

On a monthly basis, inflation climbed 0.5% from May to June, slightly less than the 0.6% economists had forecast in a Bloomberg survey. The core inflation index, which excludes volatile food and fuel, has climbed 3.5% in the past year.

READ Also  7th Pay Commission Announcement of bonus for these government employees know how much benefit they are getting

It is increasingly uncertain how quickly inflation will fall back to the Fed’s 2% target, which it tries to reach on average over time. It’s unclear how quickly the supply chain grunts that have complicated the pricing situation so far this year will dissipate, or if new ones will emerge. The escalation of coronavirus cases around the world could lead to continued disruptions in global production and shipping routes, ones that will arrive just in time for back to school and the holiday shopping season.

#Feds #favorite #price #index #rose #percent

About the author

admin