A key Federal Reserve indicator showed inflation slowed slightly in June from a year earlier, laying the groundwork for a widely expected interest rate cut in September.
The U.S. Commerce Department reported on Friday that the personal consumption expenditures price index rose 0.1% this month and 2.5% from the same period last year, in line with Dow Jones forecasts. The annual gain was 2.6% in May, while the monthly indicator was unchanged.
Fed officials use the PCE indicator as the main benchmark for measuring inflation, which continues to run above the central bank’s long-term goal of 2%.
Core inflation excluding food and energy increased by 0.2% and 2.6% respectively from the previous year, also in line with expectations. Because gas and grocery costs tend to fluctuate more than other items, policymakers tend to focus more on core operations to better gauge long-term trends.
The report also pointed out that personal income grew by only 0.2%, lower than the expected 0.4%. Spending rose 0.3%, in line with expectations.
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