U.S. Report on Inflation is Out – Here is What You Should Know

The PCE inflation report released moments ago will likely to reinforce expectations of an impending Federal Reserve interest rate cut.

For July, the core PCE Price Index increased by 0.2% month-over-month (MoM), maintaining the same growth rate as June. Annually, core PCE has risen by 2.6%, lower than expectations.

The core PCE Price Index, which omits the more volatile food and energy prices, plays a crucial role in shaping market expectations regarding the Fed’s interest rate decisions.

As it excludes erratic components, this indicator is closely watched by both the central bank and market participants to gain a clearer perspective on underlying inflation trends.

Earlier this month, data from the Bureau of Labor Statistics (BLS) revealed that the U.S. Consumer Price Index (CPI) increased by 2.9% annually in July, while the core CPI rose by 3.2%, slightly lower than the 3.3% recorded in June.

The Fed’s preferred inflation gauge for July shows a sustainable trend of disinflation, bolstering Federal Reserve officials’ confidence as they eye interest rate cuts next month.