A key inflation measure rose at fastest pace in 30 years in July

A key inflation measure rose at fastest pace in 30 years in July
Wang Ying/Xinhua/Getty Images

The Federal Reserve‘s favorite measure of inflation rose to its highest level since 1991 in July, the Bureau of Economic Analysis said Friday.

The price index for American consumer spending, also known as the PCE index, rose at a rate of 4.2% in the year ended July, the fastest pace since January 1991.

Stripping out food and energy items, the prices of which tend to be more volatile, the inflation index stood at 3.6%, flat from the month before and remaining at its highest level since March 1991.

Inflation has been a hallmark of the pandemic recovery. The reopening along with global supply chain issues are making things more expensive.

But Americans’ incomes rose as well in July, climbing more than expected — albeit still not as much as prices. Incomes rose by 1.1% last month, boosted by increased government benefits and higher wages. Benefits from child tax credit payments under the American Rescue Plan offset waning unemployment benefits as various states ended their pandemic jobless claims programs early.

It was the biggest jump in incomes since March, when the latest round of stimulus checks bolstered people’s wallets. The trend was the same for disposable incomes, which also rose 1.1%, the most since March.

The report coincides with the virtual Jackson Hole Symposium, where Fed Chairman Jerome Powell is due to speak at 10 am ET.

Investors and economists are anxiously watching whether Powell will give away any details about the central bank’s eventual tapering of monthly asset purchases that started to support the economy during the worst of the pandemic.

The Fed’s mandates are to keep prices stable and achieve maximum employment: with rising inflation and a recovering labor market, the central bank has signaled that the time may come soon to step on the brake pedal and let the economy continue the recovery on its own.

™ & © 2021 Cable News Network, Inc., a WarnerMedia Company. All rights reserved.


Popular Stories

Concert Calendar

Featured Events