US Inflation Slows Amid Middle East Tensions
US inflation slowed down in June, but experts believe this reprieve is short-lived due to rising oil prices caused by the Middle East conflict. The Personal Consumption Expenditures Price Index (PCE) increased 3.7% in the 12 months through June, matching economists' expectations.
The PCE Price Index saw a month-over-month decline of 0.1%, its weakest reading since April 2020. This moderation was mainly due to a temporary retreat in oil prices during the fragile US-Iran ceasefire, which has since fallen apart.
Brent oil prices are hovering just above $90 a barrel, while average US gasoline prices have risen back above $4 a gallon. Excluding volatile food and energy components, the PCE Price Index rose 3.3% on a year-over-year basis in June after increasing 3.4% in May.
The Federal Reserve tracks the PCE inflation measures for its 2% target. Fed chairman Kevin Warsh emphasized that there is no soft inflation target and that the central bank will not 'waver' in its commitment to lower inflation back to target.