Key US inflation measure remains tame in July

US inflation remained tame in July as the continued decline in energy prices dampened price pressures, according to official data released on Friday.

The report also confirms American consumers are supporting the economy with rising spending.

The US Federal Reserve’s preferred inflation measure rose 0.2 per cent compared to June, in line with the consensus forecast among economists, the Commerce Department reported.

The increase in the “core” Personal Consumption Expenditures price index, which excludes volatile food and energy prices, was the same.

Many economists are convinced the Fed will cut the benchmark interest rate again next month to provide a dose of stimulus to the economy as inflation has remained well below the two percent target.

Compared to July 2018, the index rose 1.4 per cent, just a tenth faster than the prior month, while the core inflation measure increased 1.6 per cent year-over-year.

Even though August costs for energy goods and services were more expensive compared to June, rebounding 1.4 per cent, they were still 2.1 per cent below their level of a year ago.

Goods prices rose 0.2 per cent in month, it fell 0.5 per cent from a year earlier.

Meanwhile, spending surged 0.6 per cent compared to the previous month, even as personal income rose just 0.1 per cent, slowing sharply from the gains in the prior four months.

“While this provides reassurance that the US growth engine keeps humming along, we expect some moderation in consumer outlays amid fading fiscal stimulus and renewed financial market volatility,” Gregory Daco of Oxford Economics said in an analysis.

As PCE price gains surpassed the Fed’s target last year, it raised interest rates four times.

But inflation has been softening since last year and policymakers earlier this month cut the policy lending rate for the first time in more than a decade.

“The persistent inflation undershoot of the Fed’s 2 per cent target along with concerning weakness in business investment and trade bolster the case for additional Fed easing,” Daco said, noting he

Key US inflation measure remains tame in July

US inflation remained tame in July as the continued decline in energy prices dampened price pressures, according to official data released on Friday. The report also confirms American consumers are supporting the economy with rising spending. The US Federal Reserves preferred inflation measure rose 0.2 per cent compared to June, in line with the consensus forecast among economists, the Commerce Department reported. The increase in the core Personal Consumption Expenditures price index, which excludes volatile food and energy prices, was the same. Many economists are convinced the Fed will cut the benchmark interest rate again next month to provide a dose of stimulus to the economy as inflation has remained well below the two percent target. Compared to July 2018, the index rose 1.4 per cent, just a tenth faster than the prior month, while the core inflation measure increased 1.6 per cent year-over-year. Even though August costs for energy goods and services were more expensive compared to June, rebounding 1.4 per cent, they were still 2.1 per cent below their level of a year ago. Goods prices rose 0.2 per cent in month, it fell 0.5 per cent from a year earlier. Meanwhile, spending surged 0.6 per cent compared to the previous month, even as personal income rose just 0.1 per cent, slowing sharply from the gains in the prior four months. While this provides reassurance that the US growth engine keeps humming along, we expect some moderation in consumer outlays amid fading fiscal stimulus and renewed financial market volatility, Gregory Daco of Oxford Economics said in an analysis. As PCE price gains surpassed the Feds target last year, it raised interest rates four times. But inflation has been softening since last year and policymakers earlier this month cut the policy lending rate for the first time in more than a decade. The persistent inflation undershoot of the Feds 2 per cent target along with concerning weakness in business investment and trade bolster the case for additional Fed easing, Daco said, noting he