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Headline PCE falls for first time in six years, core inflation remains elevated
Consumer spending climbed 0.3%, or 0.4% after inflation, driven primarily by higher spending on services.
The Federal Reserve’s preferred inflation measure unexpectedly declined by 0.1% in June, the first monthly drop in the Personal Consumption Expenditures price index in six years, according to the Commerce Department.
Annual headline PCE inflation slowed to 3.7% from 4.1% in May, while core PCE, which excludes food and energy, increased 0.1% on the month and 3.3% year-over-year.
Separately, personal income rose 0.2% and disposable personal income also increased 0.2%, supported by higher compensation, investment income and government benefits.
Consumer spending advanced 0.3% in nominal terms and 0.4% in real terms, with services accounting for the bulk of the gain. The personal saving rate was 2.7% in June.