Washington, Jun 26 (IANS): A key US inflation measure closely watched by the Federal Reserve posted its biggest year-on-year increase in May since 1992, indicating rising inflation pressures with the reopening of the economy, the Commerce Department reported .

The so-called core personal consumption expenditure (PCE) price index, the Fed's preferred inflation measure, jumped 3.4 per cent in May from a year ago, the largest 12-month increase since April 1992, Xinhua news agency quoted the Department as saying on Friday.

Including volatile food and energy prices, the headline PCE price index rose 3.9 per cent from a year earlier, the fastest annual pace since August 2008, well above the Fed's inflation target of 2 per cent.

"Many of the increases we are currently seeing will play out as we move into the summer months when the effect of a sharp drop in prices a year ago dissipates. The remainder will intensify debate within the Fed about when to taper asset purchases and hike rates," Diane Swonk, chief economist at Grant Thornton, a major accounting firm, said Friday in a blog.

"Faster than expected inflation figures have made many within the ranks of the Federal Reserve more nervous about rate hikes," Swonk said, adding seven out of 18 Fed officials are now expecting to raise rates at least once in 2022.

But Fed Chair Jerome Powell said on Tuesday that the central bank would not raise interest rates preemptively based on inflation fears, reiterating recent inflation surge is transitory.

"We will not raise interest rates preemptively because we think employment is too high, because we fear the possible onset of inflation. Instead, we will wait for actual evidence of actual inflation or other imbalances," Powell told lawmakers at a hearing before the House Select Subcommittee on the Coronavirus Crisis.