Inflation hit the highest annual rate in 40 years in June, according to the metric favored by officials at the Federal Reserve.
Headline inflation rose a half percentage point to 6.8% in the personal consumption expenditures price index, the Bureau of Economic Analysis reported Thursday morning.
Thursday’s report signals that inflationary pressures are strong even after months of interest rate hikes by the Federal Reserve, a troubling sign for President Joe Biden, whose approval ratings have suffered as households have had to pay more for necessities.
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Perhaps more troubling is that core inflation — that is, inflation with the volatile prices of food and energy stripped out — rose to 4.8% after several months of declines.
White House economists have argued that the inflation reports for June are out of date because they don’t reflect the drop in commodity prices that have taken place since then. Most notably, gas prices have dropped about 60 cents over the past month.
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Still, at nearly 7%, inflation is far above the Fed’s 2% target, meaning that the central bank is set to tighten monetary policy much more. Already, its rate hikes have slowed spending in key sectors of the economy, such as housing.
