Fed’s preferred inflation gauge shows core prices rose 3.3% annually in July - CNBC
The Federal Reserve's preferred inflation gauge, the core PCE, rose 3.3% annually in July, aligning with market expectations. While inflation remains above the 2% target, the Fed is currently weighing future interest rate policy.
Why it matters
This data is critical for investors and policymakers as it influences the Federal Reserve's decisions on interest rates and broader economic stability.
Prices consumers pay for a variety of goods and services rose slightly in July, according to the Federal Reserve's main inflation gauge.
The personal consumption expenditures price index, which the Fed uses as its preferred forecasting tool, increased a seasonally adjusted 0.2% for the month, putting the annual inflation rate at 3.7%, the Commerce Department reported Wednesday. Both were 0.1 percentage point above the Dow Jones consensus.
But stripping out volatile food and energy costs, core PCE posted respective gains of 0.2% and 3.3%, in line with forecasts. While the Fed considers both measures, policymakers generally see core inflation as the better measure of longer-term trends.
The report also showed that personal income rose 0.4% while spending increased 0.2%, both stronger than expected.
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