The U.S. personal consumption expenditures price index rose 3.7% in July from a year earlier, slightly above the market forecast of 3.6%, the Bureau of Economic Analysis said on the 26th.
On a monthly basis, the July PCE price index climbed 0.2% from June, also exceeding the market forecast of 0.1% by 0.1 percentage point. The core PCE price index, which strips out volatile food and energy prices, rose 3.3% year-on-year and 0.2% from the previous month, matching market expectations.
The PCE price index is regarded as the Federal Reserve's preferred inflation gauge. The July reading drew attention ahead of next month's Federal Open Market Committee meeting, which will set the benchmark interest rate, as investors looked for clues on the direction of policy. CNBC said the July PCE figures showed little overall change as the Fed weighs its next move on rates, while noting that inflation remains above the central bank's 2% annual target. Bloomberg said caution over inflation persists with gasoline prices back above $4 a gallon.
Market attention is expected to turn to the Jackson Hole meeting, which opens on the 27th local time and brings together Federal Reserve Chair Kevin Warsh and other central bank governors. Warsh is expected to outline his outlook for future rate policy at the gathering.
Separately, data released the same day showed the U.S. economy grew at a 1.5% rate in the second quarter, unchanged from the advance estimate. Personal income rose 0.4% over the period while spending increased 0.2%, with both indicators coming in stronger than expected.
