The Federal Reserve’s preferred measure of underlying inflation increased in June at one of the fastest paces this year while consumer spending barely rose, underscoring the dueling forces dividing policymakers over the path of interest rates.

Index, which is the Federal Reserve’s preferred gauge of inflation, rose 2.6% in June. According to data from the Commerce Department, core PCE, which excludes food and energy, increased 2.8% from one year ago.

The Federal Reserve’s preferred inflation gauge ticked up slightly in June as tariffs on imports started raising the cost of some goods – dampening hopes for an interest rate cut in September. The personal consumption expenditures (PCE) price index rose 0.

U.S. inflation increased in June as tariffs boosted prices for imported goods like household furniture and recreation products, supporting views that price pressures would pick up in the second half of the year and delay the Federal Reserve from resuming cutting interest rates until at least October.

The Personal Consumption Expenditures, the Federal Reserve's preferred inflation gauge, ticked higher in June.

President Trump’s tariffs appear to be pushing prices higher. Inflation picked up in June, according to new data from the Bureau of Economic Analysis. The Personal Consumption Expenditures Price Index (PCEPI),