The major US inflation measure posts the biggest increase since 1992.
A key US inflation measure closely monitored by the Federal Reserve reported its biggest year-on-year increase in May since 1992, reflecting rising inflationary pressures as the economy reopens, the Commerce Department reported. is.
The so-called core personal consumption expenditure (PCE) price index, the Fed’s preferred inflation measure, jumped 3.4 percent in May from a year earlier, the biggest 12-month increase since April 1992, Xinhua news agency quoted the department as saying. Friday.
Including volatile food and energy prices, the headline PCE price index rose 3.9 percent from a year ago, the fastest annual pace since August 2008, well above the Fed’s inflation target of 2 percent.
“Many of the increases we are currently seeing will go away in the summer months when the effects of the sharp drop in prices a year ago will wear off. The remainder will intensify debate within the Fed about when to cut asset purchases and hike rates. be reduced, Diane Swonk, chief economist at Grant Thornton, a leading accounting firm, said in a blog Friday.
“The sharper inflation data than expected has made many within the ranks of the Federal Reserve more nervous about rate hikes,” said Swonk, adding seven of the 18 Fed officials now have at least one in 2022. Bar rates are expected to increase.
But Fed Chairman Jerome Powell said on Tuesday that the central bank would not raise interest rates in advance based on inflationary fears, saying the recent rise in inflation is temporary.
Powell told lawmakers during a hearing before the House, “We will not raise interest rates in advance because we think employment is too high, because we fear a possible onset of inflation. Instead, we will raise interest rates for real inflation or other imbalances.” Will wait for actual evidence.” Select subcommittee on coronavirus crisis.
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