Key US inflation measures continued to cool and consumer spending picked up in June, adding to momentum in the economy ahead of the third quarter.
The personal consumption expenditures price index rose 0.2% last month from May, Commerce Department data showed Friday. From a year ago, the measure that the Federal Reserve uses to track its 2% inflation goal, increased 3% -- the slowest pace in more than two years.
The so-called core PCE price index, which economists tend to see as a better gauge of inflation as it strips out the volatile food and energy components, also rose 0.2% from the prior month and was up 4.1% from June 2022.
Consumer spending, adjusted for inflation, increased 0.4% in June -- the most since January.
Meanwhile, a quarterly measure of employment costs -- also closely watched by the Fed -- rose in the second quarter at the slowest pace in two years, according to separate government data out Friday.
While the annual inflation rate remains above the Fed's target, the sharp slowdown in price and wage growth over the past year adds to hopes that the central bank can tame inflation without causing an economic downturn.
A growing number of economists are rethinking their recession calls in the near-term or even growing confident that the US can skirt one altogether. As inflation cools, a resilient labor market is underpinning the economy.
After the Fed raised interest rates on Wednesday to the highest level in more than two decades, Chair Jerome Powell signaled the central bank's tightening campaign may be close to an end. Policymakers will have access to multiple economic reports before their next meeting in September.
Source : Bloomberg
