Jul 26, 2024 - Economy

Fed's go-to inflation gauge confirms mild price increases in June

Courtenay Brown

fed chair powell — Federal Reserve chair Jerome Powell testifies before Congress earlier this month. Photo: Bonnie Cash/Getty Images

The Federal Reserve's preferred inflation index showed prices increased at a moderate pace last month — the latest indication that America's inflation crisis is nearing its end.

Why it matters: The data also showed that consumers spent at a healthy clip in June as income gains outpaced that of inflation, signs of a still-solid economy.

By the numbers: The personal consumption expenditures index—the inflation gauge watched most closely by Fed officials—rose 0.1% in June after a flat reading the prior month, the Commerce Department said on Friday.

Excluding food and energy, the core measure rose 0.2%, a tick faster than in May.
From the same month a year ago, PCE rose 2.5% in June compared to May's 2.6%. Core PCE held at 2.6%.
The data were previewed in the GDP report released on Thursday, which showed inflation data for the second quarter.

The big picture: Data released alongside the inflation readings on Friday showed the consumer is still spending, though at a slightly cooler pace.

Spending rose 0.3% in June, slowing only slightly from May. Adjusted for inflation, spending increased 0.2%, about half as much as the previous month. Consumers spent most on international travel, housing and medical products.

Disposable personal income rose 0.2%, slowing from the 0.4% increase in May. Taking inflation into account, incomes rose 0.1% (down from 0.3%).

What to watch: The Federal Reserve will hold a policy meeting next week. Interest rates are expected to hold steady, but officials may signal a rate could come as soon as September.

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Fed's go-to inflation gauge confirms mild price increases in June

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