July’s Personal Consumption Index (PCE) increased by 4.2% over the prior year on a “core” basis, falling in line with economists’ expectations and rising 4.1% from June. On a headline basis, which includes all categories, PCE inflation rose by 3.3% year over year compared to a 3% increase in June.
Core PCE data is the Federal Reserve’s preferred inflation gauge, with the central bank looking to bring inflation down to its 2% target. “Despite the apparent strength of real demand, inflationary pressures continued to ease,” Paul Ashworth, an economist at Capital Economics, commented in a note to investors.
Fed Chair Jerome Powell said during his address at the Jackson Hole Economic Symposium that the Federal Reserve would likely need to keep interest rates higher for longer in an effort to cool inflation lower. “It is the Fed’s job to bring inflation down to our 2% goal, and we will do so,” Powell affirmed.