The Fed’s favorite inflation gauge cooled in July.

Core inflation slowed to a 4.6 percent annual increase, compared with 4.8 percent in June. On a monthly basis, the core index slowed to a 0.1 percent gain, down sharply from the prior month and less than the 0.2 percent economists in a Bloomberg survey had expected.

The decrease on overall inflation came as some durable goods, like household appliances, televisions and luggage, became cheaper, and as prices for financial services and insurance eased.

Fed officials are looking for decisive and sustained evidence before they deviate from their plans to restrain the economy to slow down lending and spending, and bring price increases under control. Friday’s report was likely an early, but not a conclusive, step in the right direction.

The central bank has sharply raised interest rates, which were near zero in March, to a range of 2.25 to 2.5 percent. Investors are keenly focused on the Fed’s Sept. 20-21 meeting, when, officials have signaled, they could lift interest rates by an unusually large three-quarters of a point — matching their last two moves — or a more modest but still meaningful half point.

Article source: https://www.nytimes.com/2022/08/26/business/economy/pce-inflation-federal-reserve.html