Employment cost index increases 1.3 in second quarter
Wages and salaries rise 1.4; up 5.3 yearonyear
Consumer spending accelerates 1.1 in June
Core PCE price index jumps 0.6; up 4.8 yearonyear

WASHINGTON, July 29 Reuters U.S. labor costs increased strongly in the second quarter as a tight jobs market continued to boost wage growth, which could keep inflation elevated and give the Federal Reserve cover to continue its aggressive interest rate hikes.

Other data on Friday showed consumer spending accelerating in June, though the uptick was tied to higher costs for gasoline as well as a range of other goods and services, with monthly prices surging by the most since 2005. Soaring inflation contributed to the economy39;s contraction in the first half of this year, leaving it on the brink of a recession.

The Fed will continue to grapple with trying to tame inflation without tipping the economy into a recession, said Dante DeAntonio, an economist at Moody39;s Analytics in West Chester, Pennsylvania The data on wage and price growth will not do them any favors as upward pressure clearly remains even as the overall economy has weakened.

The Employment Cost Index, the broadest measure of labor costs, increased 1.3 last quarter after accelerating 1.4 in the JanuaryMarch period, the Labor Department said.

Economists polled by Reuters had forecast the ECI would rise 1.2 in the second quarter. Labor costs surged 5.1 on a yearonyear basis, the largest rise since the current…