The Federal Reserve’s preferred inflation gauge showed year-over-year inflation slowing and prices actually fell month-over-month, according to the Bureau of Economic Analysis…(BEA)
- M-O-M: The Personal Consumer Expedition Index reported a 0.1% decline month-over-month in July, the first time a decline has been reported since the depths of the pandemic.
- Y-O-Y: The PCE Index showed price increases slowing to 6.3% year-over-year, this is down from 6.8% in June.
CORE: Core PCE saw a slight 0.1% increase month-over-month and a slight decline in annual growth to 4.6% from 4.8% in June.
REMINDER: CPI saw zero growth for the month and slowed to 8.5% annual growth from 9.1% in June.
Consumer spending fell to slowest pace all year up just 0.1% in July, a big slowdown from the 1.0% increase reported in June. Incomes fell as well, but were up slightly higher than spending at 0.2%, a decrease from the 0.7% increase in June and the lowest increase since January.
- The Personal savings rate held steady at 5.0% for the second month in a row.
COMMENTARY:
Eliza Winger and Andrew Husby at Bloomberg: “Personal spending disappointed in July despite a negative print on inflation, raising the risk that third-quarter GDP will barely rebound after two consecutive drops… Fed officials may eye robust labor income in the report as a reason to stay resolute on further rate hikes.”
Courtenay Brown at Axios: “It’s an encouraging sign for the Fed as it wages an intense battle against inflation. Still, even as price gains cool they remain uncomfortably high. Inflation is still up 6.3% compared to this time last year by this measure, the highest in decades.”