The core PCE Price Index inflation, which is Fed preferred inflation measure, accelerated to 4.8% in June from 4.7% in the prior month, above market expectations of 4.7%. The employment cost index, which is also important reading for policymakers, increased 1.3% in the second quarter. The index climbed to new record of 5.1% YoY.
The headline PCE jumped to 6.8% YoY in June, the highest reading since January of 1982, while core PCE is stuck slightly below 5.0%. Source: Bloomberg via ZeroHedge
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More and more US citizens are concerned that they will not be able to afford basic products if prices continue to rise at the current pace. This explains recent low consumer confidence readings. Source: Statista
Today's reading points out that price pressures still remain elevated and the peak of inflation is yet to come. At the moment the majority of economists expect the Fed will raise rates only by 50 bps in September, with interest rates peaking by December. At the beginning of the 2023 first cuts are expected. Nevertheless Fed Chair Powell recently pointed out that the labour market is strong and the central bank will be data dependent when it comes to next moves, therefore next week's NFP report will be of key importance.
