The Federal Reserve’s preferred measure of underlying inflation increased in June at one of the fastest paces this year while consumer spending barely rose, underscoring the dueling forces dividing policymakers over the path of interest rates.

The Federal Reserve's preferred measure of underlying inflation, the so-called core personal consumption expenditures price index, rose 0.3% from May and advanced 2.8% on an annual basis. Inflation-adjusted consumer spending edged up last month after declining in May and weekly jobless claims rose less than expected to 218.

A key measure of inflation posted the biggest increase in four months in June as the delayed effects of higher U.S. tariffs began to work their way through the economy, raising questions about whether the Federal Reserve will cut interest rates soon.

A key U.S. inflation gauge rose last month, in a sign that President Donald Trump’s broad-based tariffs are starting to lift prices for many goods