US Inflation Remains Elevated, Fed Faces Difficult Balance

The US Commerce Department released its personal consumption expenditures (PCE) price index for July, showing an annual inflation rate of 3.7%, which is higher than expected.

The PCE index measures prices paid by consumers for a broad range of goods and services, making it the Federal Reserve's preferred gauge for assessing inflation.

However, the core PCE index, which excludes volatile food and energy prices, rose 0.2% in July and 3.3% from a year earlier, matching economists' expectations.

The report also showed that personal income increased by 0.4%, while consumer spending rose by 0.2%, both stronger than expected.