A key inflation measure tracked closely by Federal Reserve officials rose at the slowest pace in more than two years last month, offering another signal the price increases are cooling and boosting hopes the economy may be able to avoid a recession.
The personal consumption expenditures (PCE) price index rose 0.2% in June after inching upward 0.1% in May, according to the Commerce Department. For the 12 months through June, the PCE index rose 3%, down from 3.8% as of May and the smallest increase since March 2021. The core PCE price index, which excludes the more volatile food and energy categories, rose 4.1% year over year, down from 4.6% in May. That is also the lowest increase since September 2021.
Other data released Friday showed labor costs rose the least in two years as wage growth cooled, providing yet another encouraging sign for Fed officials intent on reining in inflation.
What it all means: “It is too soon to say whether the Federal Reserve will succeed in its effort to bring inflation under control without causing a recession,” Ben Casselman and Jeanna Smialek write at The New York Times. “But recent economic data — including two reports released Friday — have looked more positive than even optimists had dared to hope a few months ago.”