Investing.com - U.S. consumer price inflation accelerated in June, according to data released on Thursday, supporting the argument for a faster pace of monetary tightening by the Federal Reserve this year.
Consumer inflation rose by an annualized 2.9% in June the Labor Department said, up from 2.8% in the previous month. The consensus forecast was for a reading of 2.9%. It was the highest reading in six years.
Last week’s minutes of the Federal Reserve’s June meeting said economic growth is “progressing smoothly” with activity “expanding at a solid rate,” and “labor market conditions continuing to strengthen.”
The minutes also noted that uncertainty and risks associated with trade policy had intensified.
At that meeting, Fed officials hiked interest rates for the second time this year and indicated that they were likely to increase rates twice more in 2018 and three more times in 2019.
The Fed tracks a different inflation measure, the personal consumption expenditures price index excluding food and energy, which hit its 2% target in May for the first time in six years.
Fed policymakers have signalled that they would not be too concerned about inflation overshooting the target.
Month-on-month, CPI rose 0.1%, down from 0.2% in May and below forecasts of 0.2%.
Core CPI, a key gauge of underlying consumer price pressures that excludes food and energy costs, increased by 0.2% from a month earlier, in line with the consensus forecast.
In the 12 months through June, core CPI rose 2.3%, also in line with forecasts.
Core prices are viewed by the Fed as a better gauge of longer-term inflationary pressure precisely because they exclude the volatile food and energy categories.
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