Consumer prices rose at a slightly faster pace last month than the month before, Commerce Department data released Friday showed.
The personal consumption expenditures price index rose 0.2% in July from June, accelerating from June's 0.1% increase from May, the acceleration was in line with economists' expectations.
Over the past year, the personal consumption expenditures (PCE) price index has increased 2.5%, matching June's year-over-year increase.
The Fed uses the PCE price index for its official 2% target and published forecasts, but officials have said they also monitor other inflation measures. The year-over-year figure is 0.5 percentage points above target, but on an annualized basis — that is, if the current rate of inflation were to continue for 12 months — PCE inflation has been slightly below the Fed's target for three consecutive months. The three-month annualized rate is currently at 0.9%.
Core PCE prices, which exclude food and energy, rose 0.2%, unchanged from the previous month, and are up 2.7% year-over-year.
Goods prices were stable this month after declining for two consecutive months. Among goods, durable goods prices fell 0.3% after remaining stable in June and declining in May. Non-durable goods prices increased slightly, 0.1%, after declining for two consecutive months.
Services prices have risen 0.2 percent over the past three months.
The report is likely to bolster the argument that the Fed can afford to start cutting interest rates in September.
Income rose 0.3 percent for the month. Real disposable income, which is calculated by subtracting taxes and adjusting for inflation, rose just 0.1 percent. Spending rose 0.5 percent before adjusting for inflation and 0.4 percent after adjusting.
Wages and salaries rose 0.3 percent before adjusting for inflation. Manufacturing wages fell.
