The Commerce Department reported that the personal consumption expenditures price index rose 0.2% in July, maintaining an annual inflation rate of 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 slightly higher than the 0.1% monthly increase and 3.6% annual rate economists had forecasted. While inflation remains above the Federal Reserve's 2% target, core inflation—which excludes volatile food and energy costs—rose 0.3% on a year-old basis. Consumer spending remained resilient but showed a slight pullback in July, while personal income grew by 0.4%. Despite the steady inflation, government bond yields have reached their highest levels since 2007. Treasury Secretary Scott Bessent announced an initiative to increase government debt buybacks to address these rising yields. Market participants are now weighing the Federal Reserve's next move, with a significant probability of a rate hike in the coming months. The data suggests that while the real economy remains solid, consumers remain cautious due to the persistent erosion of income by inflation.

Sources

• CNBC
  Fed’s preferred inflation gauge shows core prices rose 3.3% annually in July
• The New York Times
  PCE Index Shows Inflation Remained Elevated in July Amid High Energy Costs
• CNN
  Consumers pulled back on spending in July in the face of continuing price pressures
• Al Jazeera
  US inflation holds at 3.7 percent in July, above Fed target
• Bloomberg.com
  Key US Inflation Gauge Posts Muted Advance, Spending Stalls