The Federal Reserve’s preferred inflation measure edged higher in July, reversing some of the prior month’s sharp drop as the central bank works to bring inflation back to its 2% target.
The Personal Consumption Expenditures (PCE) Index excluding the cost of food and energy, or so-called “core” PCE, rose 4.2% over the prior year in July, in line with economist expectations and up from 4.1% in June, data released by the Commerce Department on Thursday showed.
On a headline basis, which includes all categories, PCE inflation rose 3.3% year over year in July, up from 3% the month prior and in line with expectations.
Personal consumption expenditures jumped at a robust pace in July, rising 0.8% versus 0.6% the month prior, driven in part by the success of “Barbenheimer” – a mash-up of the two popular movies’ names – and the Taylor Swift and Beyoncé concert tours.
“Despite the apparent strength of real demand, inflationary pressures continued to ease,” Paul Ashworth, an economist at Oxford Economics, wrote in a note to clients on Thursday.
Core PCE is the inflation measurement preferred by the Fed, as PCE – unlike the more widely-cited Consumer Price Index (CPI) – feeds directly into GDP.
Speaking last week at the Jackson Hole Economic Symposium last week, Fed Chair Jerome Powell said that inflation still remains too high.
Click here for the full report from Alexandra Canal with Yahoo Finance.