Inflation figure that the Fed follows closely hits the highest level since January 1982

An inflation gauge that the Federal Reserve uses as its primary barometer jumped to its highest 12-month gain in more than 40 years in June, the Bureau of Economic Analysis reported Friday.

The personal consumption expenditures price index rose 6.8%, the biggest 12-month move since the 6.9% increase in January 1982. The index rose 1% from May, tying its biggest monthly gain since February 1981.

Excluding food and energy, so-called core PCE increased 4.8% from a year ago, up one-tenth of a percentage point from May but off the recent high of 5.3% hit in February. On a monthly basis, core was up 0.6%, its biggest monthly gain since April 2021.

Both core readings were 0.1 percentage point above the Dow Jones estimates.

Fed officials generally focus on core inflation, but have turned their attention recently to the headline numbers as well, as food and fuel prices have soared in

The market’s recent rally could be an ‘unwelcome development’ for Fed

On Wednesday, the Federal Reserve continued efforts to tame inflation by raising interest rates for the fourth consecutive time — and communicating that more hikes are on the way.

Stocks rallied in the aftermath, with the S&P 500 jumping 2.6% on Wednesday and another 1.2% on Thursday.

The rip higher has extended the roughly six-week reversal in what has been an ugly 2022 for stocks to date; through Thursday’s close, the S&P 500 has bounced back roughly 11% from its lows in mid-June.

The Fed usually shrugs off moves in the stock market, but the turn in equities has also coincided with an alarming turn in bond markets as well — which could brew trouble for policymakers.

Longer-term interest rates, which the Fed does not directly control, don’t appear to be getting Fed Chairman Jerome Powell’s message on further rate increases. And that could potentially dampen the intended impact of

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