June PCE cools, but inflation relief may be temporary
TL;DR
The Commerce Department’s Personal Consumption Expenditures price index—the Fed’s preferred inflation gauge—fell 0.1% in June, pulling the annual rate down to 3.7% from 4.1%. The drop was driven largely by energy prices, with gasoline prices sliding as Middle East tensions cooled, boosting energy-driven consumption. Core PCE rose 0.1% month over month to 3.3% year over year, suggesting underlying inflation remains around 3%. While spending grew and the June slowdown provided some relief to households, analysts warn the decline may reverse in July due to energy volatility, keeping the inflation outlook and Fed policy path uncertain.
- The Fed’s preferred inflation gauge cooled in June. It might not last CNN
- Fed’s Preferred Inflation Gauge Eased During Pause in Iran War The New York Times
- Fed’s Preferred Inflation Index Cooled but Remained Elevated in June WSJ
- US inflation slows in June, but reversal likely amid Middle East conflict Reuters
- The Federal Reserve’s favored measure of inflation rose 3.7% last month, above its 2% target 10TV
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