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(CEP News) - The Federal Reserve's preferred measure of inflation, the personal consumption expenditures (PCE) core deflator, advanced by 0.3% (0.273%) in July, in line with expectations and contributing to a year-over-year change of 2.4% (2.426%), according to a report released by the U.S. Department of Commerce on Friday morning.
Markets had been expecting a 0.3% monthly gain in core PCE following the previous month's 0.3% rise and May 0.2% gain. On a year-over-year basis, economists expected an uptick to 2.4% from 2.3% in June. Those expectations followed stronger-than-expect PPI Core and CPI Core data released earlier this month. Annual core PCE remains three-tenths above the Fed's unofficial target level of 2.0%. The report also showed a 0.7% month-over-month decrease in personal income in July, following a 0.1% gain in June and a 1.8% gain in May. Total personal spending, which comprises roughly 70% of U.S. gross domestic product, rose 0.2%, a slower gain than the previous month's 0.6% gain and in line with expectations. Compensation rose 0.3% after a 0.2% advance in June and a 0.3% gain in May, while wages and salaries increased 0.3%, a faster pace than the 0.2% gain in June. Disposable income fell 1.1% following a 2.6% decline in June and a 5.2% advance in May. The report also recorded a 1.2% increase in the savings rate, much slower than the previous month's 2.5% gain. The PCE deflator rose 0.6% in the month, contributing to a 4.5% annual gain. By Stephen Huebl,
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, edited by Nancy Girgis,
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