The U.S. Bureau of Economic Analysis (BEA) released key data from June on Friday, and the news isn't good. The Federal Reserve's preferred inflation gauge showed the personal consumption expenditures (PCE) price index "increased 4.0 percent from one year ago, reflecting increases in both goods and services" as "energy prices increased 24.2 percent while food prices increased 0.9 percent."
When calculated without food and energy, "the PCE price index for June increased 3.5 percent from one year ago" according to the BEA, and that jump is raising eyebrows as the index's biggest move since 1991.
US Core PCE inflation rises to 3.5%, its highest level since 1991.
— Charlie Bilello (@charliebilello) July 30, 2021
“We will not raise interest rates pre-emptively because we fear the possible onset of inflation. We will wait for evidence of actual inflation or other imbalances." - Fed Chair J. Powell
Charting via @ycharts pic.twitter.com/nAxzrBw7U5
The PCE price index's now second-highest jump was in May of this year when it rose 3.4 percent, suggesting that despite the Biden administration's claims that inflation is a temporary problem, inflation is still getting worse month by month.
PCE index holds at 4% year over year gain in June, the hottest we have seen since 2008. The core PCE jumped 3.5%, a slight acceleration in June from May, its hottest pace since 1991. Those gains more than wiped out income gains during the month. A of stimulus also hurt.
— Diane Swonk (@DianeSwonk) July 30, 2021
June's increased inflation "more than wiped out income gains during the month," explained Diane Swonk — an advisor to the Federal Reserve and chief economist at Grant Thornton — invalidating part of President Biden's whispered appeal to "pay them more." Because, as any Econ 101 student can explain, an increase in pay means nothing when inflation drives up the prices of goods and services.
Republicans in Congress were quick to point to the cause of inflation hitting Americans:
It's the fastest gain since 1991!
— Senator Bill Hagerty (@SenatorHagerty) July 30, 2021
Inflation is here, yet Biden and the Democrats still want to spend trillions more like its monopoly money. https://t.co/Ejb00Ir7cz
Another inflation marker is up 3.5%, its "biggest move since July 1991."
— Richard Hudson (@RepRichHudson) July 30, 2021
This, along with the highest consumer prices in 13 years, is the latest sign that reckless spending by Washington Dems is driving inflation & hurting American families. #Bidenflationhttps://t.co/P5Wt8Qd89a