The Federal Reserve’s preferred measure of underlying inflation accelerated in June to 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 so-called core personal consumption expenditures price index, which excludes food and energy items, rose 0.3% from May, according to Bureau of Economic Analysis data out Thursday. It advanced 2.8% on an annual basis, a pickup from June 2024 that underscores limited progress on taming inflation in the past year.

The data also showed inflation-adjusted consumer spending edged up last month after declining in May.

The data illustrate the tug and pull in the economy that has Fed officials split over the course of monetary policy. On the one hand, progress on inflation has essentially stalled and central bankers fear that President Donald Trump’s tariffs will exert greater upward pressure on prices. On the other, a retrenchment in consumer spending due to a softening labor market risks a broader slowdown in the economy.

The Fed kept borrowing costs unchanged for a fifth straight meeting on Wednesday, though two governors dissented in favor of a quarter-point cut. Chair Jerome Powell was staunch in his defense of a solid labor market and upside risks to inflation that support keeping rates steady for now.

Stock-index futures remained higher, Treasury yields were still lower and the dollar was little changed after the report.