The Federal Reserve’s preferred inflation gauge was unchanged in July, easing concerns that tariffs are reviving cost pressures.
According to data released by the Bureau of Economic Analysis on Aug. 29, annual personal consumption expenditure (PCE) price index inflation was flat at 2.6 percent in July.
Core PCE inflation, which strips out noisy signals from volatile energy and food components, ticked up to 2.9 percent year over year from 2.8 percent in June.
Both readings were in line with economists’ expectations.
On a monthly basis, the PCE price index edged up by 0.2 percent, and core PCE increased by 0.3 percent.
While monetary policymakers assess the totality of the inflation data, the Fed places more weight on the PCE price index over the consumer price index (CPI) because it includes a broader range of goods and services. Additionally, the PCE price index’s basket of goods and services is adjusted more frequently to reflect changes in consumer behavior….