By Obinna Uballa
Core inflation in the United States rose to 2.9% in July, marking its highest level since February and signaling that tariffs are filtering through the economy, according to Commerce Department data released Friday.n
The personal consumption expenditures (PCE) price index, the measure closely watched by the Federal Reserve Bank, showed core prices, excluding food and energy, advancing at an annual rate of 2.9%, slightly above June’s 2.8%. On a monthly basis, core prices rose 0.3%, matching forecasts.
The broader PCE index, which includes food and energy, increased 2.6% from a year ago and 0.2% for the month. While inflation remains above the Fed’s 2% target, analysts say the report is unlikely to alter expectations for a rate cut in September.
US Federal Reserve Bank Governor Christopher Waller had on Thursday reiterated his support for an interest rate reduction, noting he could back a bigger move if signs of labor market weakness persist.
“The Fed opened the door to rate cuts, but the size of that opening is going to depend on whether labor-market weakness continues to look like a bigger risk than rising inflation,” Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management, told CNBC.
Despite elevated prices, consumer spending rose 0.5% in July, while personal income climbed 0.4%, suggesting households remain resilient.
Energy prices fell 2.7% year over year, keeping overall inflation contained, while food costs increased 1.9%. Services prices surged 3.6%, compared with just 0.5% growth in goods prices.
