Fed’s Preferred Inflation Gauge Report
According to the report about the Federal Reserve‘s preferred inflation gauge, the prices in the United States rose by just 0.2% from June to July, marking the third consecutive month of modest increases, Detroit News reported.
Compared to the same period the previous year, prices in July saw a 3.3% rise, up from a 3% annual increase in June.
However, it’s important to note that this year-over-year figure is significantly lower than the peak of 7% reached a year ago, although it remains above the Fed’s 2% inflation target. This increase is partly attributed to smaller price hikes recorded a year ago, as reflected in the inflation gauge.
When examining specific items, the cost of groceries only increased by 0.2% from June to July, although they have risen by 3.5% over the past year. Gas prices increased by 0.3% in July but are still 22.3% lower than their levels from a year earlier.
In the automotive sector, new car prices decreased by 0.1%, but they are still 3.6% higher compared to July of the previous year. Used car prices experienced a 1.4% drop from June to July and are down 5.5% when compared to the same period 12 months ago.
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More About Fed’s Preferred Inflation Gauge Report
These latest findings align with other recent reports suggesting that the economy and job market may be slowing down, which could help alleviate inflation pressures.
Excluding the volatile categories of food and energy, “core” inflation showed a 0.2% increase from June to July, consistent with the previous month. Year-over-year core prices increased by 4.2%, slightly up from the 4.1% recorded the previous month. The Federal Reserve closely monitors core prices as an indicator of future inflation trends.
It’s important to differentiate the inflation gauge mentioned in this report, the personal consumption expenditures price index, from the more widely known consumer price index (CPI).
Earlier this month, the CPI reported a 3.2% increase in July compared to a year earlier, down from a peak of 9.1% in June 2022.
The report also indicated that Americans increased their spending in July, with consumer spending rising by a healthy 0.8% from June to July, up from a 0.5% gain from May to June. This suggests that the U.S. economy is experiencing solid growth in the current July-September quarter.
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