WASHINGTON - A closely-watched measure of US inflation was flat in June for the second straight month, while the annual rate dropped, confirming the weakness of price pressures, official figures showed Tuesday.
The weak showing for the Personal Consumption Expenditures Price Index, the Federal Reserve's preferred inflation measure, further reduced the chances the central bank will raise interest rates again this year, as had been expected.
The Fed has raised the benchmark lending rate twice this year, and continue to expect inflation to hit the two percent target over the medium term. But policymakers acknowledged the sluggish price growth, saying they were "monitoring inflation developments closely."
But the latest set of numbers gave no sign that inflation will move in policymakers' preferred direction any time soon.
The PCE price index, which tracks what individual consumers pay for goods and services, was unchanged in June, as it was in May.
Excluding the volatile food and fuel categories, the index added a token 0.1 percent in June, in line with analyst expectations and the same as the prior month.
For the year ended in June, however, the index actually retreated a tenth of a point to 1.4 percent, the lowest rate since September and moving the opposite direction as the Fed expects, falling eight-tenths of a point since February.
Excluding food and fuel, the so-called core 12-month measure was 1.5 percent, the same as in May. The core measure has been below the Fed's two percent target for more than five years.
Typically low unemployment, currently 4.4 percent, and steady job creation should push wages and prices higher, fueling inflation. But economists have been left scratching their heads, however, as wage gains remain sluggish and prices persist in being moribund.