Fed's go-to inflation gauge creeps higher as trade war ramps up

By the numbers: Compared to the same period a year ago, the Personal Consumption Expenditures price index increased 2.6% in July, holding steady from the previous month.

• But core PCE, which excludes food and energy costs, rose 2.9%, up from 2.8% in June — the fourth straight increase. Policymakers consider this measure to be a better gauge of underlying inflation.
• On a monthly basis, PCE rose 0.2% in July, down slightly from the 0.3% increase in June. Core PCE rose 0.3%, matching the pace in June.

The big picture: The inflation data came alongside a pick-up in consumer spending, which rose by 0.3%, compared to the 0.1% gain in June.

• Much of that gain came from stronger spending on goods, while services expenditures barely budged.

The bottom line: The Fed's preferred inflation indicator confirmed that inflation is no longer making progress towards its 2% target, even as the central bank considers cutting interest rates in September.