Inflation accelerated in June, with the Commerce Department’s personal consumption expenditures price index—the gauge favored by the Federal Reserve—rising 0.3% from May and 2.6% from a year earlier, topping economists’ 2.5% estimate. Core PCE, which strips out food and energy, matched the monthly gain and advanced to 2.8% on an annual basis, also slightly above expectations. The back-to-back monthly increases leave both measures further above the Fed’s 2% target less than 24 hours after Chair Jerome Powell told lawmakers he expected headline and core PCE to run at 2.5% and 2.7%, respectively, over the coming year. Household finances showed only modest traction. Personal income and nominal spending each grew 0.3% in June, while inflation-adjusted spending eked out a 0.1% gain after contracting in May. Separately, the Employment Cost Index rose 0.9% in the second quarter, matching the first quarter’s pace and exceeding forecasts, underscoring persistent wage pressures. Labor-market readings were mixed. Weekly initial jobless claims edged up to 218,000 and June job openings slipped to 7.44 million, yet both metrics remain consistent with a historically tight market. Meanwhile, the Conference Board’s consumer-confidence index climbed to 97.2 in July, its highest since March, suggesting households remain generally upbeat despite firmer prices. The hotter-than-forecast inflation prints, combined with steady wage growth, have led traders to curb expectations for a September rate cut. Policy makers next meet on Sept. 17-18 after maintaining the federal-funds target at 4.25%–4.50% this week. Investors now await July’s consumer-price report and the August employment data for further guidance on the Fed’s trajectory.