The Commerce Department reported that the personal consumption expenditures price index rose 0.2% in July, keeping the annual inflation rate at 3.7%.
The Commerce Department reported that the personal consumption expenditures price index rose 0.2% in July, keeping the annual inflation rate at 3.7%. This figure was 0.1 percentage point higher than the Dow Jones consensus. While prices for goods declined by 0.1%, prices for services rose by 0.3%, driven by gains in financial services, insurance, and housing. Consumer spending, when adjusted for inflation, remained flat in July, marking a sharp slowdown from June. However, personal income grew by 0.4%, the strongest gain since January. These solid income gains helped buffer household savings, which rose to 3% in July. Federal Reserve officials are currently evaluating the next policy move as inflation remains above the 2% target. Markets are currently pricing in a low probability of a rate hike in September, with the best chance for the rate hike coming in December. Treasury Secretary Scott Bessent announced an initiative to increase government debt buybacks to address rising bond yields.