Inflation slipped again in June, according to the statistic favored by the Federal Reserve, signifying another miss for the central bank.
Annual price gains slowed from a revised 1.5 percent down to 1.4 percent, the Bureau of Economic Analysis reported. Core inflation, which strips out food and energy prices, held steady at 1.5 percent.
Inflation has dropped in the past few months from 2.1 percent in February. During the same time, the Fed has been raising interest rates and plans to reverse stimulus measures in anticipation of faster rising inflation.
Tuesday’s numbers will likely cause concern for the minority of officials at the central bank who worry they are falling short of their target and could be stoking faster economic growth. Nevertheless, Federal Reserve Chairwoman Janet Yellen has shrugged off falling inflation in recent months, predicting that it will “stabilize” in future months as unemployment keeps falling and the economy continues to grow.
Yellen has chalked up the Fed’s miss on inflation to one-off factors driving down prices, such as intense competition between cell service providers to offer unlimited data plans.
Tuesday’s inflation data is based on the Bureau of Economic Analysis’ personal consumption expenditures index. It is different from the more frequently cited consumer price index.
The Fed adopted the explicit 2 percent inflation goal in January of 2012. Yet for almost all of that time, from April of that year until now, inflation has run below 2 percent, with the exception of February of this year. Core inflation hasn’t hit 2 percent once during that period.
From the Fed’s perspective, higher inflation isn’t good for its own sake. Instead, the central bank favors 2 percent inflation as a sign that the economy is at full health.
For consumers, however, lower inflation is better.
