(CNN Business) – Another key measure of inflation rose to a new 40-year high in the US during June, a month marked by record gasoline prices.
The Price Index for Personal Consumer Expenditure (PCE), which measures the variance in the costs of goods and services that consumers acquire, rose 6.8% in June compared to the same period a year earlier, according to the data. Released by the Bureau of Economic Analysis on Friday.
That beats the previous record of 6.6% set in March of this year, and also marks a four-decade high. The June number is just a shy of the 6.9% year-on-year seen in January 1982, when inflation slowed from one of the highest levels in US history.
Prior to June, the PCE price index was stable at 6.3% in May and April. But in June, gasoline prices hit record highs, pushing another key measure of inflation, the Consumer Price Index, to an almost 41-year high. Energy prices have since fallen.
Excluding fluctuations in food and energy prices, core personal consumption spending – the rate of inflation that the Federal Reserve closely monitors – rose 4.8% from the previous year. It is slightly higher than May, but lower than the 5.3% high in February.
Rising energy costs helped push the Consumer Price Index, another key gauge of inflation, to a nearly 41-year high in June, according to data from the Bureau of Labor Statistics released earlier this year.
Friday’s data showed that Americans’ income grew 0.6% month-on-month, while disposable income rose 0.7% and spending increased 1.1%. However, when inflation is taken into account, consumer spending increased by just 0.1% and disposable income decreased by 0.3% month over month.
Scott Brave, senior consumer spending economist at Morning Consult, said consumer spending is slowing, mainly due to inflation.
“Inflation-adjusted personal disposable income fell again in June. It’s already been on a steady downward trend for over a year now,” Brave told CNN Business in an interview. “And that’s just pressure, it puts a burden on the consumer to react, and I think we’re now at that point where growth is definitely slowing,” he added.
He said that it is the low-income families that are primarily affected and most affected.
“Recently, we’re starting to see that also happening in middle-income families,” he said. “They have also started to cut spending further and have to adjust their spending allocations,” he explained.