PCE Inflation Holds Steady at 3.7% Amid Ongoing US Trade Fights

The personal consumption expenditures price index (PCE) remains elevated at 3.7% in July, unchanged from June and still above the Federal Reserve's target of 2%. This stubbornly high inflation is a key issue heading into the midterm elections, as Americans struggle with higher costs.

Gas prices have been a major contributor to inflation, but even though they fell last month, overall prices remained high due to rising costs for services like healthcare and financial advice. The Commerce Department plans to adjust its calculations for these services starting next month, which could lower measured inflation by 0.2 percentage point.

Core inflation, excluding volatile food and energy categories, was also unchanged at 3.3% in July. This is a concern for the Federal Reserve, as some officials have said that core inflation running at about 0.2% a month would be a reassuring sign that inflation is heading back to the 2% target.