Another key gov’t inflation gauge shows that prices cooled off in July

Aug. 26 (UPI) — A closely watched government inflation report on Friday basically echoed what two earlier economic reports signaled: Inflation seems to be cooling off as gas prices fall.

According to the Personal Consumption Expenditures index, inflation climbed by only 6.3% over the 12-month period that ended in July.

From June to July, prices actually declined by 0.1% — when most economists expected a 0.2% increase.

The figures are improvements over what previous PCE reports have shown. The 12-month period ending in June, for example, showed an inflationary increase of almost 7%.

The PCE index is considered the Federal Reserve’s top indicator for inflation. It measures prices paid by consumers for goods and services.

Analysts are generally more interested in the PCE’s figure for “core inflation,” which excludes potentially volatile food and energy costs. Without the volatility of food and energy, core inflation is viewed as a better indicator of where inflation truly stands.

Friday’s report is the fourth in recent weeks to show that inflation seems to be cooling. The retail sales report for July, the Consumer Price Index and the Producer Price Index all showed weaker inflation than economists expected.

Some analysts are forecasting the third straight 0.75% interest rate hike when the Fed holds its policy meeting later this month. In May, the Fed hiked rates by a half-point.

At a key symposium in Wyoming on Friday, Federal Reserve Chairman Jerome Powell promised that the central bank will keep making large interest rate hikes until inflation returns to a manageable level. Raising rates restricts spending, which is a key driver of inflation.

“Last month incomes were up, and overall prices were down,” President Joe Biden said of the PCE index in a statement Friday. “Prices actually came down nationwide last month. … the American people are starting to get some relief.

“Today confirms that our economic plan is building the economy from the bottom up and the middle out and we are making progress.”(function(d,s,id){var js,fjs=d.getElementsByTagName(s)[0];if(d.getElementById(id))return;js=d.createElement(s);js.id=id;js.src=’https://experience.ex.co/sdk.js’;fjs.parentNode.insertBefore(js,fjs);}(document,’script’,’exco-sdk’));