July PCE inflation stayed above the Fed’s target while consumer spending and business investment pointed to faster third-quarter growth.
Annual US inflation held at 3.7% in July, well above the Federal Reserve’s 2% target, while economic data pointed to stronger growth in the third quarter, Reuters reported.
The Personal Consumption Expenditures Price Index rose 0.2% from June after falling 0.1% the previous month. Core PCE inflation, which excludes food and energy, increased 3.3% annually and 0.2% monthly.
Consumer spending growth was revised up to an annualized 3.4% in the second quarter from 3.2%. Capital-goods orders also rebounded, and shipments of durable goods suggested continued investment in artificial-intelligence infrastructure.
Economists said the data could keep the Federal Reserve focused on containing inflation. Nationwide chief economist Kathy Bostjancic said third-quarter real GDP growth appeared to be running at least 3%, double the second quarter’s unrevised 1.5% rate.
Fed funds futures indicated about a 40% chance of an interest-rate increase at the September meeting after the report, up from roughly 36% beforehand.
The figures were released two days before Fed Chair Kevin Warsh was scheduled to give his first keynote speech at the Kansas City Fed’s Jackson Hole symposium.
