Fed's Inflation Gauge Cools, But Experts Predict Brief Relief

The Federal Reserve's preferred inflation gauge, the Personal Consumption Expenditures price index, cooled in June for the first time in six years. However, experts warn that this relief may be short-lived.

According to the Commerce Department data released on Thursday, the PCE index dropped 0.1% from May, bringing the annual rate down to 3.7% from 4.1%. The inflation slowdown is largely attributed to a decrease in energy prices, particularly gasoline, which plummeted by 9.2% in June.

This significant drop was partly due to a brief ceasefire agreement between the US and Iran in mid-June. However, prices have since rebounded, with the national average gas price now above $4 per gallon.

When excluding volatile energy and food prices, the 'core' PCE index rose 0.1% on a monthly basis and was up 3.3% from a year ago.