The year-over-year figure is down sharply from the 7% peak it reached a year ago, though still above the Fed’s 2% inflation target.
An inflation measure closely watched by the Federal Reserve ticked higher in July as steep prices continue to squeeze millions of US households. showed that consumer prices rose 0.2% from the previous month, according to the Commerce Department.
While the Fed is targeting the PCE headline figure as it tries to wrestle consumer prices back to 2%, Chair Jerome Powell previously told reporters that core data is actually a better indicator of inflation. Other figures included in the report showed that consumer spending jumped 0.8% in July, compared with a 0.6% increase in June.
Core prices, which strip out the more volatile measurements of food and energy, climbed 0.2% from the previous month and 4.2% from the previous year.“Consumers spent freely in July even if it meant dipping into their savings amid slower income growth,” said Gregory Daco, EY chief economist. “We anticipate the trend will slow in August and September as elevated prices for goods and services, higher borrowing costs and moderating income limit consumers’ spending appetite.
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