US Fed's inflation gauge drop slightly to 2.5% in June

The Federal Reserve's preferred inflation gauge slowed slightly on an annual basis in June 2024, maintaining the bank's trajectory for potential interest rate reductions in the coming months. 

Official data released on July 26 showed that the Personal Consumption Expenditures (PCE) price index rose by 0.1% in June on a monthly basis, aligning with Wall Street expectations. The annual inflation measure slowed to 2.5% from 2.6% in May.

The core PCE index, which excludes food and energy prices, increased by 0.2% compared to May, also in line with expectations, and up 2.6% on an annual basis. 

Federal Reserve officials primarily use the PCE price index to gauge inflation, which remains above the central bank's target of 2%.

Today's data provides encouraging evidence that the Fed's tightening campaign is making its way through the economy without causing significant harm.

The data also revealed that personal income rose by 0.2%, below the expected increase of 0.4%, while spending increased by 0.3%, matching estimates.