WASHINGTON, Aug. 30 (Xinhua) -- The U.S. personal consumption expenditures (PCE) price index, the Federal Reserve's preferred inflation measure, rose 2.5 percent in July compared with a year ago, as inflation continued to cool amid high interest rates, the Commerce Department reported on Friday.
The latest figure came after the measure ticked up from 2.5 percent in February to 2.7 percent in March, remained at 2.7 percent in April, dropped to 2.6 percent in May, and then edged down to 2.5 percent in June, according to the department's Bureau of Economic Analysis.
The PCE gauge takes into account how consumers change their behavior in light of higher prices, and is a broader measure of consumer behavior than the consumer price index (CPI).
The so-called core PCE price index, which strips out volatile food and energy prices, rose 2.6 percent in July from a year ago, in line with the figures in May and June, and down from the 2.8 percent in previous months. The latest data is still well above the Federal Reserve (Fed)'s inflation target of 2 percent.
Twelve-month core PCE inflation peaked at 5.6 percent in February 2022.
U.S. Federal Reserve Chair Jerome Powell said last week that the "time has come" for monetary policy to adjust, noting that the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.
"Inflation has declined significantly. The labor market is no longer overheated, and conditions are now less tight than those that prevailed before the pandemic. Supply constraints have normalized," Powell said. "My confidence has grown that inflation is on a sustainable path back to 2 percent."
The Chicago Mercantile Exchange Group's FedWatch Tool, which acts as a barometer for the market's expectation of the Fed funds target rate, showed that the probability of the Fed cutting rates by 25 basis points at the September meeting is 69.5 percent as of Friday morning. The probability of the Fed cutting rates by 50 basis points is 30.5 percent. ■
