Core Inflation Hits Highest Level in 30 Years

US President Joe Biden takes off his face mask before speaking about Covid vaccinations in the East Room of the White House in Washington, DC, July 29, 2021. (Photo by SAUL LOEB / AFP) (Photo by SAUL LOEB/AFP via Getty Images)
Photo by SAUL LOEB/AFP via Getty Images

A key measure of inflation reached a 30-year high last month, data released Friday by the Commerce Department showed.

Excluding food and energy, consumer prices were 3.5 percent higher last month than they were in June 2020, the briskest pace of inflation since the summer of 1991 and an acceleration from a month ago.

The data comes from the Bureau of Economic Analysis’ personal consumption expenditure price index, which is the index used by the Fed in its inflation targeting and projections.

The better-known Consumer Price Index, which is produced by the Bureau of Labor Statistics, came in at 4.5 percent in June. That was also nearly a 30 year high.

The two indexes tend to follow the same path over time, although they are composed using different data sets on divergent bundles of goods and services. The Fed switched from CPI to the PCE two decades ago after deciding that it was a better gauge of prices in the economy. CPI tends to show more inflation than the PCE index.

The overall PCE index rose 4 percent from a year ago, matching the rise in May at the highest since 2008.

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