Key Fed inflation gauge shows no relief for squeezed families

Published

2 years ago

September 1, 2023

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An inflation measure closely watched by the Federal Reserve ticked higher in July as steep prices continue to squeeze millions of US households.

The personal consumption expenditures (PCE) index showed that consumer prices rose 0.2% from the previous month, according to the Commerce Department.

On an annual basis, prices climbed 3.3% — up from 3% the previous month, underscoring the challenge oftaming high inflation.

The figures were both in line with estimates from Refintiv economists.

Core prices, which strip out the more volatile measurements of food and energy, climbed 0.2% from the previous month and 4.2% from the previous year.

While the Fed is targeting the PCE headline figure as it tries to wrestle consumer prices back to 2%,Chair Jerome Powellpreviously told reporters that core data is actually a better indicator of inflation.

Both the core and headline numbers point to inflation that is still running above the Fed’s preferred 2% target.

“The PCE index has been moving in the right direction overall, but core inflation remains stickier than expected keeping the data dependent and agile Fed more likely to raise rates again this year,” said Quincy Krosby, chief global strategist for LPL Financial.

Other figures included in the report showed that consumer spending jumped 0.8% in July, compared with a 0.6% increase in June.

Still, many economists anticipate that spending will slow in coming months as spenders continue to grapple with expensive goods, high interest rates and the resumption of federal student loan payments.

“Consumers spent freely in July even if it meant dipping into their savings amid slower income growth,” said Gregory Daco, EY chief economist. “We anticipate the trend will slow in August and September as elevated prices for goods and services, higher borrowing costs and moderating income limit consumers spending appetite.”

Stocks climbed Thursday morning as the report fueled investor hopes for a rate pause.

The Fed in July approved another interest rate hike, lifting the benchmark rate to the highest level since 2001.

Powell signaled last week that additional rate hikes may be on the table this year as policymakers assess whether high inflation has retreated for good.

“Although inflation has moved down from its peak a welcome development it remains too high,” he said. “We are prepared to raise rates further if appropriate, and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective.”

Politics

Trump’s crypto agenda is rigged for the rich

Published

2 hours ago

June 5, 2025

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Trump’s crypto agenda is rigged for the rich

Donald Trump’s crypto agenda claims to champion financial freedom, but in reality, it consolidates power among political elites and wealthy investors, sidelining everyday users.

World

Russian ambassador partly blames UK for Ukrainian drone attack

Published

2 hours ago

June 5, 2025

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Russian ambassador partly blames UK for Ukrainian drone attack

Russia’s UK ambassador has told Sky News that Ukraine’s recent attacks risk escalating the conflict to “World War III” as he partly blamed the UK.

Andrei Kelin warned that Ukraine’s actions “are bringing the conflict to a different level of escalation”, in an interview with Sky News’ Yalda Hakim, and said Kyiv should “not try to engulf World War III”.

“That’s the very worst case scenario that we can imagine,” he said.

More than a hundred Ukrainian drones were deployed inside Russia over the weekend, destroying more than 40 warplanes in an attack Volodymyr Zelenskyy said “will undoubtedly be in history books”.

Mr Kelin pointed the finger at the UK when he said Ukraine must have had assistance in the attacks.

“[This] kind of attack involves, of course, provision of very high technology, so-called geospaced data, which only can be done by those who have it in possession. And this is London and Washington,” he said.

“I don’t believe that America [is involved], that has been denied by President Trump, definitely, but it has not been denied by London.

“We perfectly know how much London is involved, how deeply British forces are involved in working together with Ukraine.”

On Wednesday, Donald Trump said Vladimir Putin told him “very strongly” that Russia “will have to respond to the recent attack on the airfields”.

The US president said that he discussed the attack with Mr Putin during a phone call that lasted more than an hour.

“It was a good conversation, but not a conversation that will lead to immediate peace,” he wrote.

Mr Kelin repeated this sentiment, telling Sky News: “It is up to the Ministry of Defence to make a right solution, but we have to respond to it.”

A Downing Street spokesperson said: “We never comment on operational matters at home or abroad.”

World

Trump and China’s Xi have ‘very good’ phone call and agree to more talks amid trade war

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2 hours ago

June 5, 2025

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Trump and China's Xi have 'very good' phone call and agree to more talks amid trade war

Donald Trump says he has had a “very good” phone call with Xi Jinping amid their ongoing trade war, during which they agreed to more tariff talks.

Trade negotiations between the United States and China stalled shortly after a 12 May agreement between the two countries to reduce their rates on levies while talks took place.

The call was first reported by Chinese state media and confirmed by the Chinese foreign ministry. According to Chinese state media, Mr Trump initiated the call with the Chinese president.

In a post on his Truth Social platform, the US president said: “I just concluded a very good phone call with President Xi of China, discussing some of the intricacies of our recently made, and agreed to, trade deal.”

He said the call lasted around an hour and a half and “resulted in a very positive conclusion for both countries”.

There “should no longer be any questions” on rare earth products, he said.

“The conversation was focused almost entirely on trade. Nothing was discussed concerning Russia/Ukraine, or Iran,” Mr Trump added.

He said the two nations had agreed to further tariff talks, and both leaders invited each other to visit their respective countries.

According to Chinese state media, Mr Xi “pointed out that it is especially important to correct the course of the big ship of China-US relations, which requires us to keep the rudder and set the direction, especially to remove all kinds of interference and even sabotage”.

Mr Xi “emphasised that the US should handle the Taiwan issue carefully” to avoid the two countries being dragged “into a dangerous situation of conflict and confrontation”.

According to the readout of the call, Mr Trump “expressed great respect for President Xi Jinping and the importance of the US-China relationship”.

It came a day after Mr Trump declared it was difficult to reach a deal with his Chinese counterpart.

“I like President Xi of China, always have, and always will, but he is very tough, and extremely hard to make a deal with!!!,” Mr Trump said in a post on Truth Social.

The US president has cut his 145% tariffs on Chinese goods to 30% for 90 days to allow for talks, while China reduced its taxes on US goods from 125% to 10%.

The trade war has produced sharp swings in global markets and threatens to damage trade between the two nations.

Mr Trump’s treasury secretary Scott Bessent had suggested only a conversation between the two leaders could resolve their differences in order for talks to begin in earnest.

Mr Trump and Mr Xi last spoke in January, three days before his inauguration, where they discussed trade, as well as Mr Trump’s demand for China to do more to stop the drug fentanyl from entering the US.