WASHINGTON: A key measure of annual US inflation rose last month at the fastest pace seen in six years, pushed by rising energy costs, the Commerce Department reported Thursday.
The Federal Reserve’s preferred price index, based on consumer spending, rose 2.3 percent in the 12 months ended in July, according to the monthly data, which was the strongest rate since March 2012.
Excluding volatile food and energy prices, the inflation rate also accelerated, rising to 2.0 percent, which hits the Fed’s goal.
With the US economy growing at a brisk pace of 4.2 percent in the second quarter, and unemployment rate at historic low levels, the central bank is watching closely for signs prices are accelerating.
However, Fed officials have said they can tolerate inflation a little above or below the target. The Fed has raised the key lending rate twice this year, and is expected to hike again in September and December.
Energy goods and services surged 13.4 percent compared to July 2017, while goods prices rose only 1.4 percent.
The Personal Consumption Expenditures price index rose just 0.1 percent in July compared to June, and was up 0.2 percent excluding food and energy.
Personal income increased 0.3 percent or nearly $55 billion, while spending jumped 0.4 percent or $49 billion, according to the report. —AFP