The inflation lull that helped President Donald Trump keep pressure on the Federal Reserve is over as June’s data show the tariffs are finally hitting consumer prices—and Fed Chair Jerome Powell was wise to hold his ground.
The most closely watched inflation gauge by the central bank, the Personal Consumption Expenditures (PCE) price index, jumped to 2.6% year-over-year, up from 2.3% in May and topping expectations of 2.5%. That’s the highest annual rate since February.
Core PCE, which strips out food and energy and directly informs the Fed’s rate decisions, held firm at 2.8%, unchanged from the upwardly revised May reading and above forecasts of 2.7%, underscoring the persistence of underlying inflation.
On a monthly basis, both headline and core inflation rose 0.3%, accelerating …