US Fed's preferred inflation indicator eases in June

By Ovunc Kutlu

ISTANBUL (AA) - The US Federal Reserve's preferred inflation indicator eased in June both annually and monthly, according to the Commerce Department figures released Friday.

The core personal consumption expenditures (PCE) price index rose 4.1% annually in June, down from a 4.6% year-on-year gain in May, and managed to come lower than the market expectation of a 4.2% increase.

On a monthly basis, the index rose 0.2% in June, also softening from a 0.3% monthly gain in May, and coming in line with the market expectation.

"The $100.4 billion increase in current-dollar PCE in June reflected an increase of $51.2 billion in spending for services and an increase of $49.1 billion in spending for goods," the Commerce Department said in a statement.

Within services, the largest contributors to the increase were financial services and insurance, it said, adding the largest contributors to the increase within goods were motor vehicles and parts.

On a monthly basis, food prices decreased 0.1% but energy prices increased 0.6%, according to the figures.

The PCE price index, which includes food and energy prices, rose 3% annually in June, also easing from a 3.8% year-on-year gain in May, and coming lower than the market estimates of a 3.1% increase.

On a monthly basis, however, the index rose 0.2% in June, up from a 0.1% month-on-month gain in May, and coming in line with the market estimates.

The Fed on Wednesday raised its benchmark interest rate by 25 basis points, carrying target range for the federal funds rate between 5.25% and 5.5% -- the highest in more than 22 years.

While Fed chair Jerome Powell said it is "certainly possible” that the central bank would raise rates in September if "the data warranted," he noted that it could choose to hold rates steady and would be making "careful assessments, meeting by meeting."