A key measure of inflation rose more in the first half of the year than previously believed, government data released Thursday showed.
The personal consumption expenditure price index, a measure of inflation produced by the Commerce Department, showed prices rising at a 7.5 percent annualized rate in the first quarter and 7.3 percent in the second quarter. The previous estimate had prices rising at a 7.1 percent rate in each quarter.
The PCE price index is the Fed’s preferred measure of inflation. When the Fed says it targets two percent inflation, it is referring to the PCE index. It tends to follow the same dynamic as the Consumer Price Index over time, although it is usually somewhat lower.
The index for durable goods prices rose at a 8.3 percent pace in the first quarter and 2.4 percent in the second quarter. The prior estimate, released in August, had prices rising 6.5 percent in the first quarter and 1.4 percent in the second quarter.
Prices of nondurable goods, including food and gasoline, rose 15.2 percent in the first quarter and 15.7 percent in the second, up from the prior estimate of 15.0 percent and 15.5 percent.
Inflation in the services sector was revised up to 4.9 percent in the first quarter and 5.6 percent in the second quarter. The August estimate had services prices rising 4.6 percent and 5.5 percent.
Core PCE inflation, which excludes food and energy, was also revised up. This is now seen as rising 5.6 percent in the first quarter and 4.7 percent in the second quarter. The prior estimate was 5.2 percent and 4.4 percent.