The United States Bureau of Economic Analysis (BEA) has published the Personal Consumption Expenditures (PCE) Price Index data for July.
The PCE price index, the Federal Reserve’s preferred inflation measure, is closely monitored by market participants as it could potentially impact policy outlook.
PCE Price Index for July
From the preceding month, the PCE price index for July increased 0.2 percent. Excluding food and energy, the PCE price index increased 0.3 percent. From the same month one year ago, the PCE price index for July increased 2.6 percent. Excluding food and energy, the PCE price index increased 2.9 percent from one year ago.
In July 2025, the US PCE price index climbed 0.2% month over month, down from 0.3% in June, as expected. Core PCE, excluding food and energy, rose 0.3%, mirroring the previous month and estimates. Annually, headline PCE inflation remained stable at 2.6%, while core PCE increased to 2.9% from 2.8%, the highest level in five months, as forecast.
The core PCE price index in the United States, which excludes volatile and energy prices and is the Federal Reserve’s preferred gauge of underlying inflation in the US economy, increased 0.3% from the previous month in July 2025. It was the same as in June, consistent with market forecasts. The indicator increased by 2.9% over the previous year, its highest level in five months.
Rate Cut Expectations
US CPI Data in July was steady at 2.7% while the core CPI data accelerated to 3.1% and rose the most in 6 months. US inflation may not yet be under full control, but with the federal funds rate currently at 4.25%-4.5%, markets anticipate two 25-basis-point rate cuts, one each in September and December, followed by quarterly decreases through 2026.
Powell may consider a rate cut due to concerning job data, including a 4.2% unemployment rate and over 250,000 job losses in May and June.
The FOMC meeting on September 16-17 will be influenced by hard economic data, including the Employment Situation for August on September 5 and the US CPI data on September 11.
US stock market indices are near all-time highs as investors continue to process the most recent data from AI chip major Nvidia and numerous other earnings reports. Many analysts have once again started asking if the US stock market is in a bubble.