US Inflation Holds Steady at 3.7% Amid Ongoing Trade Tensions

Despite recent cooling from its post-pandemic highs, inflation remains elevated in the US, according to the latest data from the Commerce Department. The personal consumption expenditures price index (PCE) rose 3.7% in July compared with a year earlier, the same as June.

The PCE index is running hotter than the consumer price index (CPI), partly because it puts less weight on rental costs, which have been cooling steadily in recent months. Core inflation was also unchanged at 3.3% in July, excluding volatile food and energy categories.

Many economists believe that the PCE index has been pushed higher by its method of calculating the cost of financial advice and software prices. As a result, the Commerce Department plans to adjust these measurements starting next month, which could lower measured inflation by 0.2 percentage point or so.