Price growth in the U.S. accelerated in June, according to the Federal Reserve’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) index. The PCE rose 0.3% from May to June, marking an annual increase of 2.6%. This uptick reflects a faster pace than the 2.4% rise over the previous year, indicating inflationary pressures are persisting.

When excluding volatile categories such as food and energy, the core PCE also advanced by 0.3% for the month and stood 2.8% higher than a year ago. This annual rate is unchanged from the previous month but remains above the central bank’s 2% target, underscoring continued concerns about sticky underlying inflation.

One of the significant drivers behind the recent acceleration in prices is the renewed uncertainty caused by broad-based tariffs imposed by the U.S. administration. The increased cost of imported goods—such as appliances, furniture, and toys—has contributed noticeably to consumer price hikes, making the inflation figures more pronounced.

Despite rising inflation, the Federal Reserve opted to keep its key interest rate unchanged at 4.3%. Policymakers signaled caution, indicating they are monitoring whether this tariff-driven price surge will be temporary or if it will have a more lasting impact on inflation trends.

Consumer spending showed only modest growth, increasing by 0.3% in June after a flat May, while personal income bounced back by 0.3%. However, when adjusting for inflation, real wage growth stagnated, suggesting higher prices are eroding purchasing power.

Overall, June’s data highlights the challenges faced by the Federal Reserve as it attempts to balance inflation risks with economic growth, all while uncertainty surrounding trade policy continues to shape the inflation outlook.