Fed's preferred inflation gauge shows price increases accelerated in June amid tariff uncertainty
Source: Yahoo! Fnance
Updated Thu, July 31, 2025 at 8:44 AM EDT
The latest reading of the Federal Reserve's preferred inflation gauge showed price increases accelerated in June as inflation remained above the Fed's 2% target.
The "core" Personal Consumption Expenditures (PCE) index, which strips out food and energy costs and is closely watched by the central bank, rose 0.3% from the prior month, in line with the 0.3% economists had expected and above the 0.2% increase seen in May.
On an annual basis, core prices rose 2.8%, above the 2.7% economists had expected and in line with May's reading. May's 2.8% reading was revised higher from an initially reported 2.7% increase.
The release comes just one day after the Fed opted to hold interest rates steady at its July meeting, with Fed Chair Jerome Powell stressing that it's still the "early days" of any tariff impact on inflation and that there is still "a long way to go" before the full effects will be clear.
Read more: https://finance.yahoo.com/news/feds-preferred-inflation-gauge-shows-prices-increased-more-than-expected-in-june-123314802.html
From the source - https://www.bea.gov/news/2025/personal-income-and-outlays-june-2025
Article updated.
Previous article/headlines -
Updated Thu, July 31, 2025 at 8:44 AM EDT
The latest reading of the Federal Reserve's preferred inflation gauge showed price increases accelerated in June as inflation remained above the Fed's 2% target.
The "core" Personal Consumption Expenditures (PCE) index, which strips out food and energy costs and is closely watched by the central bank, rose 0.3% from the prior month, in line with the 0.3% economists had expected and above the 0.2% increase seen in May.
On an annual basis, core prices rose 2.8%, above the 2.7% economists had expected and in line with May's reading. May's 2.8% reading was revised higher from an initially reported 2.7% increase.
The release comes just one day after the Fed opted to hold interest rates steady at its July meeting with Fed Chair Jerome Powell stressing its still the "early days" of any tariff impact on inflation and there is still "a long way to go" before the full effects will be clear.
Original article/headline.
Thu, July 31, 2025 at 8:33 AM EDT
The latest reading of the Federal Reserve's preferred inflation gauge showed price increases accelerated in June more than expected as inflation remained above the Fed's 2% target.
The "core" Personal Consumption Expenditures (PCE) index, which strips out food and energy costs and is closely watched by the central bank, rose 2.8% on an annual basis, above the 2.7% economists had expected and higher than the 2.7% seen in May.
Core prices rose 0.3% from the prior month, in line with the 0.3% economists had expected and above the 0.2% increase seen in May.
The release comes just one day after the Fed opted to hold interest rates steady at its July meeting with Fed Chair Jerome Powell stressing its still the "early days" of any tariff impact on inflation and there is still "a long way to go" before the full effects will be clear.

OrlandoDem2
(3,058 posts)progree
(12,136 posts)Last edited Thu Jul 31, 2025, 11:27 AM - Edit history (1)
Just for a quick look at the graphs. I'm still working on the blah blah part
I'm not a big fan of the PCE, because it is a chained price index. It all boils down to is that it includes the effects of consumers switching to lower grade items, so, for example if in the face of high beef prices, consumers switch to chicken and beans, that lowers the reported meat and food PCE inflation numbers. (The reverse also happens too)
For that reason, I prefer the CPI, which has less of that.
But the PCE, especially the Core PCE, is what the Fed favors, so anyone trying to predict what the Fed might do needs to focus on the Core PCE, and not the CPI measures
The Fed favors the CORE measures for forecasting FUTURE inflation, as shown by analysis of the data.
I annualize them all to be easy to compare to each other, and to compare to the FED's 2% goal. I use the actual index values rather than the one-digit changes that are commonly reported in the media. Links to the data are with the graphs.
ALL the numbers are the seasonally adjusted ones
REGULAR ALL ITEMS PCE
BEA.gov News release: https://www.bea.gov/ and click on "Personal Income and Outlays" or "Personal Income"
https://fred.stlouisfed.org/series/PCEPI
CORE PCE:
https://fred.stlouisfed.org/series/PCEPILFE
REGULAR ALL ITEMS CPI (released 7/15/25)
https://www.bls.gov/news.release/cpi.nr0.htm
https://data.bls.gov/timeseries/CUSR0000SA0
CORE CPI (released 7/15/25):
http://data.bls.gov/timeseries/CUSR0000SA0L1E
LBN thread on CPI inflation, 7/15/25:
https://www.democraticunderground.com/10143496078
BACK TO THE PCE released 7/31/25 - Year-over-Year
from: https://www.bea.gov/news/2025/personal-income-and-outlays-june-2025
BumRushDaShow
(157,375 posts)and I was waiting for CNBC to start blaring headlines and nada.
At least Yahoo! Finance came to the rescue!
progree
(12,136 posts)because the last CPI came in at +0.3% and +0.2%, and the PCE tends to be lower because it is a chained type index that fully takes substitution into account (so that if enough people switch from beef consumption to turkey necks, it shows up as a reduction in meat prices). Also that the PCE puts lower weight on shelter than the CPI.
Well, I was wrong, today's PCE came out at the expected +0.3% and +0.3%.
Tomorrow is the exciting "First Friday" BLS payroll jobs and unemployment rate report, and perhaps the return of the "Krasnov Krasnov Krasnov" brigade.
progree
(12,136 posts)Meanwhile, personal income rose 0.3% after falling 0.4% the month prior. ((since inflation was 0.3% in June, that means real personal income was flat -Progree))
Edited to add: Later, from AP: https://www.msn.com/en-us/money/markets/a-key-us-inflation-gauge-rose-last-month-as-trump-s-tariffs-lifted-goods-prices/ar-AA1JEAQW
So yes, Yahoo 3 paragraphs above was wrong ("Real personal spending, which adjusts for inflation, rose 0.3%,"). As for why with consumer spending up 0.3% and inflation up 0.3%, why inflation-adjusted aka "real" spending was up 0.1% (and not 0.0%), it's just that the govt does calculations from the index values using several digits of accuracy, and then round the results, so sometimes that results in the rounded value being 0.1 percentage point more or less than if you did one-digit-of-accuracy calculations like 0.3% - 0.3% = 0.0%
The term "real" means inflation-adjusted in BEA and BLS-speak
==========================================
https://www.bea.gov/news/2025/personal-income-and-outlays-june-202
Disposable personal income (DPI)personal income less personal current taxesincreased $61.0 billion (0.3 percent) ((this means it's flat after inflation -Progree))
and personal consumption expenditures (PCE) increased $69.9 billion (0.3 percent). ((this means it's flat after inflation, but actually it increased 0.1% because of how things rounded, per table near bottom of https://www.bea.gov/news/2025/personal-income-and-outlays-june-2025 -Progree))
Personal outlaysthe sum of PCE, personal interest payments, and personal current transfer paymentsincreased $69.5 billion in June.
Personal saving was $1.01 trillion in June and the personal saving ratepersonal saving as a percentage of disposable personal incomewas 4.5 percent.
BEA Tables at: https://www.bea.gov/sites/default/files/2025-07/pi0625.pdf
Here's one segment from https://www.bea.gov/news/2025/personal-income-and-outlays-june-2025
[Percent change from May to June]
Current-dollar personal income 0.3
Current-dollar disposable personal income 0.3
Real disposable personal income 0.0
Current-dollar personal consumption expenditures (PCE) 0.3
Real PCE 0.1
PCE price index 0.3
PCE price index, excluding food and energy 0.3
==============================================
ProudMNDemocrat
(19,977 posts)Guard your loins and purses people!
TACO Don's price increases will begin!!
timms139
(349 posts)Republican corporations raised prices while Joe was president and not needed using inflation as an excuse. Now that Trump is in office and have a legitimate reason in the tariffs but say they are delaying price increase with the wait and see attitude .Funny how they play politics with people struggling to make ends meet just to help a slob like Trump .They seem to never pass on an opportunity to jack prices under a democrat president .