The Fed’s preferred inflation measure climbed faster than expected in July, complicating rate decisions amid persistent price pressures.
The Personal Consumption Expenditures price index, the Federal Reserve’s preferred inflation gauge, increased 0.2% in July from the prior month, exceeding economists’ expectations by 0.1%. Year-over-year, the index rose 3.7%, also topping forecasts.
Core PCE, which excludes food and energy, matched estimates with a 0.2% monthly gain and a 3.3% annual rise. The data contrasts with softer June and July Consumer Price Index readings and a weaker-than-expected July jobs report, signaling uneven progress in cooling inflation.
Personal income grew 0.4% in July, while spending rose 0.2%, both above projections. With consumer spending driving over half of U.S. GDP, stronger demand could sustain inflationary pressures.