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.

Index, which is the Federal Reserve’s preferred gauge of inflation, rose 2.6% in June. According to data from the Commerce Department, core PCE, which excludes food and energy, increased 2.8% from one year ago.

The Federal Reserve’s preferred inflation gauge ticked up slightly in June as tariffs on imports started raising the cost of some goods – dampening hopes for an interest rate cut in September. The personal consumption expenditures (PCE) price index rose 0.