Inflation measure closely watched by the Fed rises 2.5% in June

The inflation indicator is Federal Reserve There was some easing in June, even as rising prices continue to weigh heavily on millions of Americans.

According to the Labor Department, the personal consumption expenditures (PCE) index showed that consumer prices rose 0.1% from the previous month, and were up 2.5% year-on-year, down slightly from the previous month’s 2.6% increase.

Both figures were in line with estimates by economists surveyed by LSEG.

“Overall, it’s been a good week for the Fed,” said Chris Larkin, managing director of trading and investments at E*Trade. “The economy looks to be on solid footing and PCE inflation is essentially stable, but a rate cut next week remains unlikely.”

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Services prices rose 0.2% month-on-month, remaining 3.9% higher than the same period last year. Commodity prices also rose 0.1% month-on-month, despite a 2.1% drop in energy prices, according to the report. Commodity prices are down 0.2% from last year.

Excluding food and energy, core prices rose 0.2% from the previous month and 2.6% from a year earlier, both slightly above expectations.

The Federal Reserve is targeting the PCE headline to bring consumer prices back to 2%. Chairman Jerome Powell He previously told reporters that the core data was actually a better indicator of inflation.

Both the core and headline indexes suggest that inflation is slowly returning to the Fed’s preferred 2% target.

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Other figures in the report showed that consumer spending rose 0.3% in June, up from a 0.4% increase in May, as Americans continue to loosen their purse strings. Consumer spending has proven surprisingly resilient despite high prices, high interest rates and a renewed economic crisis. Federal Student Loan Payments.

The report also showed that personal income rose just 0.2% last month.

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The data came as investors look for signs that the Federal Reserve is ready to cut interest rates. Policymakers meet next week and are widely expected to keep rates on hold at their 23-year highs.

With the economy cooling and signs of inflation gradually easing, most investors now expect the Fed to deliver its first rate cut in September.