- June's PCE reading put the index's year-over-year rate at 3.7%, a step down from the 4.1% recorded in May, according to Commerce Department data.
- The Fed’s preferred inflation gauge cooled in June, with the Personal Consumption Expenditures price index dropping 0.1% from May.
- Consumer spending rose 0.3% in June, with household spending advancing in nominal terms.
- Gasoline and energy goods prices sank 9.2% in June, marking the largest monthly drop since August 2022.
- Overall inflation fell in June for the first time in six years, indicating a significant shift in economic conditions.
- Services drove the bulk of the increase in consumer spending, with spending on services up $58.2 billion.
- Personal income increased by $54.9 billion, or 0.2%, in June, contributing to the rise in consumer spending.
The Federal Reserve's preferred inflation gauge, the Personal Consumption Expenditures (PCE) price index, eased to 3.7% in June, down from 4.1% in May. This decline was driven by a significant 9.2% drop in gasoline and energy prices, marking the largest monthly decrease since August 2022.
In June, household spending rose 0.3% in nominal terms, while inflation-adjusted consumer spending increased by 0.4%, matching an 11-month high, according to data from the Commerce Department. Personal income also saw a rise of $54.9 billion, or 0.2% during the same period.48
The PCE data reflects a period when a brief U.S.-Iran ceasefire allowed oil prices to retreat, contributing to the overall inflation decrease. Economists had anticipated the PCE index would slow to 3.7%, and the June reading confirmed this expectation. Core PCE, which excludes food and energy, rose 0.1% month-over-month and is up 3.3% year-over-year, indicating that underlying inflation remains a concern despite the overall decline.6
The next PCE release, covering July, is scheduled for August 26, 2026, according to the Bureau of Economic Analysis (BEA).
“The Personal Consumption Expenditures price index dropped 0.1% from May, marking the first decline in overall inflation in six years. Falling gas prices, which sank 9.2% in June, contributed to this easing, although core inflation remains around 3%, providing limited relief for households.”
qz.com
