The latest personal consumption expenditures price index is out. It’s one of the two big measures of inflation in the U.S. economy. Prices were up 0.3% in June, up 2.6% from a year ago. 

Both of those numbers are higher than they’ve been in several months. Some of the previous month’s numbers were revised up, too. And all of that is factoring into the Federal Reserve’s thinking on what to do with interest rates in this country.

It’s getting a little more expensive to buy a flight and go on vacation.

“In particular, it’s costing Americans more to travel abroad,” said Omair Sharif, president of Inflation Insights.

It’s getting a little more expensive to live in a home.

“Shelter continues to add and we had a pretty big bump in health care costs as well in June,” said Sharif.

And it is getting more expensive to just buy stuff.

"Things like apparel, appliances, furniture, bedding, TVs — on a month-over-month basis, they increased by 0.53%,” said Sharif. “We haven’t had a number that strong since January of 2023."

Back in December, the yearly inflation rate for goods excluding autos was 0.2%. In June it was 1.1%, and that is tariffs starting to show up in the economy, Sharif said. But something else also showed up — wages.

“Despite the inflation number, wages continue to grow faster,” said Scott Helfstein, the head of investment strategy for GlobalX.

Helfstein acknowledged that, even with certain challenges, the broader economic momentum remains strong.

“While there are some areas of concern, the economy continues to power ahead,” said Helfstein.

So people are getting raises that are higher than inflation. But, they didn’t spend a whole lot more in June when you take that inflation into account — just 0.1% more. Could be consumer stress, but more likely it’s just a break was needed, said Gus Faucher, chief economist at PNC Financial Services Group.

"Consumers bought a lot earlier in the year because they were concerned about the tariffs on prices and they wanted to buy ahead of that,” Faucher said. So it would make sense that spending growth is a little bit softer now."

Looking at all of this — the inflation, the wages — is the Federal Reserve. It’s gotta decide what to do with interest rates. Being on the high side as they are, holds back the economy some, but it is a way to keep inflation from spreading beyond tariffs deeper into the economy.

"The Fed's concern is, is that if we start to see higher inflation, well then maybe workers start to get larger wage increases, which in turn would lead to higher inflation over the longer run,” said Faucher.

That’s why, he said, the Fed yesterday said it wasn’t ready just yet to cut rates.