Inflation jumps to highest level in six years

We are beginning to see more signs that inflation is making its way to the United States.

According to the Department of Commerce, U.S. consumer price inflation rose to a 2.3 percent annual increase, the biggest jump since 2012.

From Bloomberg:

Price measures were in line with analyst estimates. The Fed’s preferred inflation gauge — tied to consumption — rose 0.1 percent from the previous month. Some Fed officials have indicated that they’re comfortable with annual inflation exceeding their target a bit, given that price gains were below their goal for most of the past six years.

Excluding food and energy, so-called core prices rose 0.2 percent from the prior month. The core index, seen as a more reliable gauge of underlying inflation, was up 2 percent from July 2017, after a 1.9 percent increase in June.

Highlighting the effects of rising prices, inflation-adjusted spending rose 0.2 percent from the prior month, the slowest pace since a decline in February.

The report also showed that consumer purchases climbed 0.4 percent, while incomes slowed 0.3 percent.

This should be ample evidence for the Federal Reserve to raise interest rates at next month’s Federal Open Market Committee (FOMC) meeting.