Richmond Fed President Barkin Says Inflation Too High After 4.1% PCE Rise

Federal Reserve Bank of Richmond President Tom Barkin said inflation numbers are too high after the personal consumption expenditures index rose 4.1% in the year through May, Fortune reported. That increase marked the largest since April 2023. Barkin spoke Sunday in an interview with Bloomberg on the sidelines of the Aspen Ideas Festival in Aspen, Colorado.

He said it is hard to have confidence that inflation is headed back to 2% without further influence from the fed funds rate, the labor market or another disinflationary feature. Gasoline prices declined rapidly in the Richmond Fed district after oil prices fell following a recent ceasefire agreement between the U.S. and Iran.

Barkin cited the build-out of artificial intelligence infrastructure as another force contributing to inflation. Federal Reserve officials left the benchmark federal funds rate unchanged at a meeting earlier this month. Barkin said price pressure from tariffs and the oil shock should now be waning.

Americans’ spending remained strong over the past year, Barkin said. He added that businesses take today’s inflation into account when setting prices, creating some persistence. Barkin said companies face higher input costs yet see consumers resist higher prices, limiting how much of those costs firms can pass on.

In a recent trip to western Virginia, company leaders told him they remain undecided about how much they will raise employee compensation next year. When gas prices rose, those leaders thought they might need to give larger-than-usual raises, Barkin said, but moderating prices may remove that need.