The core personal consumption expenditures (PCE) price index rose 3.3% on a 12-month basis in July, according to CNBC. Economists surveyed by Dow Jones had expected the PCE price index to rise 3.6% annually and 0.1% on the month.
Key facts
- CNBC reported that core prices rose 3.3% annually in July, as measured by the PCE price index.
- Economists surveyed by Dow Jones had expected the PCE price index to rise 3.6% on a 12-month basis.
- The same survey expected a 0.1% monthly increase.
- The PCE price index is the Federal Reserve's preferred measure of inflation.
The core personal consumption expenditures (PCE) price index rose 3.3% on a 12-month basis in July, according to CNBC. The gauge is closely watched because the PCE price index is the Federal Reserve’s preferred measure of inflation.
Economists surveyed by Dow Jones had expected the PCE price index to rise 3.6% on a 12-month basis and 0.1% on the month, according to the survey cited by CNBC. The source does not specify whether the 3.6% expectation refers to the headline or core reading, so a direct comparison with the 3.3% core figure cannot be drawn from the available material.
The PCE price index is used by the Federal Reserve to help guide its decisions on interest rates and broader monetary policy. Because it reflects changes in the prices of goods and services purchased by consumers, policymakers monitor it to assess whether inflation is moving toward the central bank’s goals.
The full context of the report, including any additional detail from the Fed and the precise headline reading, was not provided in the available source.
Why it matters
Inflation data such as the PCE price index directly influences the Federal Reserve's decisions on interest rates, which affect borrowing costs for households and businesses. Readings on the gauge can shift expectations about the central bank's next moves and ripple through financial markets.
Frequently asked questions
What is the PCE price index?
The personal consumption expenditures (PCE) price index is the Federal Reserve's preferred gauge of inflation, tracking price changes for goods and services purchased by consumers.
How did July's core reading compare to forecasts?
Core prices rose 3.3% annually in July, below the 3.6% annual increase economists surveyed by Dow Jones had expected, according to CNBC.
What monthly figure did economists expect?
Economists surveyed by Dow Jones expected the PCE price index to rise 0.1% on a monthly basis, per CNBC.