Consumer price growth in the U.S. accelerated in line with economist estimates in the month of July, according to a report released by the Commerce Department on Thursday.
The Commerce Department said the annual rate of consumer price growth increased to 3.3 percent in July from 3.0 percent in June. The faster growth matched expectations.
The reading on inflation also showed consumer prices rose 0.2 percent on a monthly basis in July, matching the uptick in June as well as economist estimates.
The report also said the annual rate of growth by core consumer prices, which exclude food and energy prices, inched up to 4.2 percent in July from 4.1 percent in June. The modest increase also matched expectations.
Core consumer prices rose by 0.2 percent on a monthly basis in July after edging up by 0.2 percent in June, in line with estimates.
The readings on prices for personal consumption expenditures are said to be the Federal Reserve’s preferred gauges of inflation.
“July PCE inflation was modest for a second straight month, establishing a solid runway for the Fed to leave rates unchanged next month,” said Chris Low and Will Compernolle, FHN Financial Chief Economist and Macro Strategist.
They added, “There is one more CPI report before the September FOMC meeting (coming during the pre-meeting quiet period) that could shift the FOMC’s inflation confidence when setting rate and inflation projections for the year ahead.”
The inflation readings were included in the Commerce Department’s report on personal income and spending in the month of July.
The report said personal income crept up by 0.2 percent in July after rising by 0.3 percent in June, while personal spending advanced by 0.8 percent in July after climbing by 0.6 percent in June.
Economists had expected personal income and spending to increase by 0.3 percent and 0.6 percent, respectively.
Disposable personal income, or personal income less personal current taxes, came in unchanged in July following a 0.2 percent uptick in June.
Meanwhile, real personal spending, which excludes price changes, increased by 0.6 percent in July after climbing by 0.4 percent in June.
With spending rising more than income, personal saving as a percentage of disposable personal income tumbled to 3.5 percent in July from 4.3 percent in June.
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