Fed's PCE Inflation Gauge Pulls Back in June Amid Energy Market Volatility

The Federal Reserve's preferred inflation gauge, the personal consumption expenditures (PCE) index, pulled back in June. The Commerce Department reported that the PCE index declined 0.1% on a monthly basis and was up 3.7% from a year ago.

This rate of increase was in line with economists' predictions. Core PCE, which excludes volatile food and energy prices, rose 0.1% on a monthly basis and 3.3% from a year ago. This figure also matched expectations, but the monthly increase was slightly lower than predicted.

Federal Reserve policymakers focus on the PCE headline figure as they aim to bring inflation back to their target of 2%. However, they view core data as a better indicator of future inflation trends.

Compared with May's readings, headline PCE declined from 4.1% to 3.7%, while core PCE fell from 3.4% to 3.3%. Goods prices increased by 3% in June compared to one year ago, and services prices rose 2.3% over the same period.