WASHINGTON: The United States Federal Reserve’s preferred inflation gauge held steady in July, but a measure of underlying prices ticked higher, government data showed on Friday (Aug 29), as President Donald Trump’s tariffs rippled through the economy.
The personal consumption expenditures (PCE) price index rose 2.6 per cent in July from a year earlier, unchanged from June, the Commerce Department said. Excluding food and energy, the PCE index climbed 2.9 per cent, up from June’s 2.8 per cent.
Both figures remain above the Fed’s long-run two per cent target, though they do not indicate a sharp surge in costs.
TARIFF PRESSURES
Analysts say businesses are so far holding back from passing on the full impact of Trump’s wide-ranging import duties.
“Inflation continues to nudge higher, but it’s clear that companies were not passing along most of the tariff price increases this summer,” said Heather Long, chief economist at the Navy Federal Credit Union.
She noted that the 2.6 per cent figure was in line with expectations, but warned that “the middle class does not have much extra room in their budgets to absorb higher costs”.
