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- The PCE inflation measure rose 0.4% in July, signaling a slowdown in price growth from the prior month.
- The print matched the median economist estimate. It was the slowest price growth since February.
- The Federal Reserve and the Biden administration expect inflation to cool as the economy settles into a new normal.
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Prices for common goods rose as expected in July as case counts rebounded and reopening-fueled demand softened.
The Personal Consumption Expenditures price index – one of the most popular measures of US inflation – jumped 0.4% last month, the Commerce Department said Friday. That matches the median forecast of a 0.4% increase. The print reflects a slowdown from June's inflation rate and the slowest price growth since February.
On a year-over-year basis, the metric rose 4.2%. That just exceeded the median estimate of a 4.1% gain.
The Core PCE index, which excludes volatile energy and food prices, rose 0.3% through July, according to the report. That also matched economist estimates.
Core PCE is the inflation measure of choice for the Federal Reserve, which is tasked with ensuring inflation doesn't rise too high. The central bank has said it will let inflation run above 2% year-over-year for some time as the economy recovers. Policymakers also expect the recent inflation surge to prove "transitory" and fade into 2022 as the US settles into a post-pandemic normal.
The PCE reading comes a few weeks after a similar inflation measure showed price growth easing in July. The Consumer Price Index climbed 0.5% last month, matching economist forecasts and marking a sharp deceleration from June's 0.9% pace. The measure also rose 5.4% year-over-year, still the highest since 2008 but holding flat from June's year-over-year level.
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