WASHINGTON: A key measure of annual US inflation rose last month at the fastest pace seen in six years, pushed by rising energy costs, the Commerce Department reported on Thursday (Aug 30).
The Federal Reserve's preferred price index, based on consumer spending, rose 2.3 per cent in the 12 months ended in July, according to the monthly data, which was the strongest rate since March 2012.
Excluding volatile food and energy prices, the inflation rate also accelerated, rising to 2.0 per cent, which hits the Fed's goal.
With the US economy growing at a brisk pace of 4.2 per cent in the second quarter, and unemployment rate at historic low levels, the central bank is watching closely for signs prices are accelerating.
However, Fed officials have said they can tolerate inflation a little above or below the target. The Fed has raised the key lending rate twice this year, and is expected to hike again in September and December.
Energy goods and services surged 13.4 per cent compared to July 2017, while goods prices rose only 1.4 per cent.
The Personal Consumption Expenditures price index rose just 0.1 per cent in July compared to June, and was up 0.2 per cent excluding food and energy.
Personal income increased 0.3 per cent or nearly US$55 billion, while spending jumped 0.4 per cent or US$49 billion, according to the report.