UPDATES WITH PRESIDENT JOE BIDEN'S COMMENTS
By Ovunc Kutlu
ISTANBUL (AA) - The US Federal Reserve's preferred annual inflation indicator remained unchanged at 2.6% in July, according to Commerce Department figures released Friday.
The figure came in slightly lower than market expectations of 2.6% after the core personal consumption expenditures (PCE) price index also annually rose 2.6% in June.
On a monthly basis, the core PCE price index increased 0.2% in July, following a 0.2% month-on-month increase in June, and came in line with market estimates.
The PCE price index, which includes food and energy prices, annually rose 2.5% in July, after increasing 2.5% in June year-on-year, also coming lower than market expectations of 2.6%.
That index, on a monthly basis, increased 0.2% in July, following a 0.1% gain in June, and also coming in line with market estimates.
The slight gains in PCE and core PCE figures are not expected to change investors' anticipation that the Fed will deliver its first interest rate cut at the conclusion of its two-day meeting on Sept. 18.
The Fed has made a total of 11 interest rate increases between March 2022 and July 2023 to tame the record inflation, carrying the federal funds rate to the 5.25%-5.5% target range – the highest in 22 years.
The US central bank skipped four rate hikes last year, and five more this year.
The Commerce Department's Bureau of Economic Analysis said prices for goods decreased by less than 0.1%, but prices for services increased 0.2%.
"Food prices increased 0.2 percent and energy prices increased by less than 0.1 percent," it said in a statement.
Annually, prices for goods decreased by less than 0.1%, while prices for services increased 3.7%.
"Food prices increased 1.4 percent and energy prices increased 1.9 percent," on an annual basis, it added.
There was a 0.4% increase in real PCE during the month of July, which reflected a massive 0.7% gain in spending on goods and a rise of 0.2% in spending on services, the agency noted.
"Within goods, the largest contributor to the increase was motor vehicles and parts," said the statement.
"Within services, the largest contributor to the increase was health care," it added.
"Today’s report shows we are making real progress, with inflation falling to 2.5%—continuing at the lowest level in more than three years," President Joe Biden said in a statement released by the White house.
Biden said wages are growing more than prices, providing American people an extra $1,400 in income since the coronavirus pandemic.
"But there is more work to do," he said, adding "Prices are still too high."
"Vice President Harris and I are fighting to lower costs by building 3 million new homes and expanding our prescription drug caps to all Americans. We’re also lowering costs by investing in record energy production. Prices at the pump are almost 50 cents lower than a year ago—the lowest Labor Day gas prices in three years," he said.
Biden argued that Congressional Republicans want to give massive tax cuts to billionaires and big corporations, while raising taxes on Americans by almost $4,000.
"Experts agree that their plans would 'reignite' inflation—undoing our work to lower costs and grow the middle class. We won’t let them," he said.