Fed’s preferred inflation gauge shows core prices rose 3.3% annually in July

The Federal Reserve's preferred inflation measure showed core prices rising 3.3% year-over-year in July, missing the 3.6% consensus forecast from Dow Jones-surveyed economists. The personal consumption expenditures price index increased 0.1% on a monthly basis, matching expectations.

The softer-than-anticipated PCE print arrives as markets scrutinize every inflation data point for clues on the Fed's next move. The 3.3% annual core reading marks continued disinflation from the cycle peak, though it remains well above the central bank's 2% target. The headline PCE figure and month-over-month comparisons will provide additional context for whether price pressures are genuinely moderating or simply pausing.

July's cooler reading could reinforce dovish sentiment among traders pricing in rate cuts, particularly if paired with weakening employment data. However, the Fed has repeatedly stressed its focus on sustained progress toward the 2% target before adjusting policy.