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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.”

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Chancellor insists Labour rebels ‘know the welfare system needs reform’ as they push for change

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Chancellor insists Labour rebels 'know the welfare system needs reform' as they push for change

Chancellor Rachel Reeves has insisted that rebelling Labour MPs “know the welfare system needs reform” as the government faces a growing backlash over planned cuts.

Sir Keir Starmer is under pressure from Labour MPs, with about 40 in the Red Wall – the party’s traditional heartlands in the north of England – warning the prime minister’s welfare plan is “impossible to support” in its current form.

Dozens have thrown their support behind a letter urging the government to “delay” the proposals, which they blasted as “the biggest attack on the welfare state” since Tory austerity.

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Ms Reeves on Friday reiterated her plans for reform, insisting that no-one, including Labour MPs and party members, “thinks that the current welfare system created by the Conservative Party is working today”.

She said: “They know that the system needs reform. We do need to reform how the welfare system works if we’re going to grow our economy.”

But, the chancellor added, if the government is going to lift people out of poverty “the focus has got to be on supporting people into work”.

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“Of course if you can’t work, the welfare state must always be there for you, and with this government it will be,” she said.

The reforms, announced ahead of Ms Reeves’s spring statement in March, include cuts to Personal Independence Payments (PIP), one of the main types of disability benefit, and a hike in the universal credit standard allowance.

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Starmer faces rebellion from Labour MPs over welfare reforms

The government has claimed that changes to welfare will cut the budget by £4.8bn overall.

Separately, Downing Street refused on Friday to deny that Ms Reeves has consulted on potentially overhauling their winter fuel payment policy.

Labour’s unpopular decision to means-test the policy has taken the benefit away from millions of pensioners.

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Ministers have faced pressure from their own backbenchers to rethink the policy in the wake of last week’s local election results, which saw Labour lose the Runcorn by-election and control of Doncaster Council to Reform UK.

Asked if the chancellor has discussed the winter fuel payment in private, the prime minister’s spokesperson said they would not give a running commentary.

Pushed again, Number 10 said a “range” of discussions take place in government – which is not a denial.

However, it is worth noting that when reports emerged earlier this week that Downing Street was reviewing the policy, the government strongly pushed back on that suggestion.

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Ten explosions near international airport in India-administered part of Kashmir, officials say

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Ten explosions near international airport in India-administered part of Kashmir, officials say

Ten explosions have been heard near Srinagar International Airport in India-administered parts of Kashmir, officials have told Reuters news agency.

The blasts followed blackouts caused by multiple projectiles, which were seen in the sky above the city of Jammu earlier on Friday.

Explosions were also heard in the Sikh holy city of Amritsar, in the neighbouring Punjab state, according to Reuters.

An Indian military official told the agency that “drones have been sighted” and “they are being engaged”.

It comes as tensions between India and Pakistan across the line of control around the region of Kashmir have boiled over this week, leading to fears of a wider conflict.

Map of where explosions were reported in Kashmir and from where

On Wednesday morning, India carried out missile strikes in Pakistan and Pakistan-administered parts of the disputed region.

The retaliation came weeks after 26 people, mainly Indian tourists, were shot dead by gunmen in an India-administered part of Kashmir last month.

The government in India said it hit nine “terrorist infrastructure” sites, while Pakistan said it was not involved in the April attack and the sites were not militant bases.

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Explained: India-Pakistan conflict

Around 48 people have been killed since Wednesday, according to casualty estimates on both sides – which have not been independently verified.

India also suspended its top cricket tournament, the Indian Premier League, as a result of rising tensions, while the Pakistan Super League moved the remainder of its season to the United Arab Emirates.

Meanwhile, White House press secretary Karoline Leavitt said at a conference on Friday that the US is in constant contact with both India and Pakistan.

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Russia’s Victory Day parade felt more like a celebration of war than peace

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Russia's Victory Day parade felt more like a celebration of war than peace

Standing on Red Square, this was an intimidating sight, which felt much more like a celebration of war rather than peace.

I could feel the ground shake as the tanks rolled past, their caterpillar tracks on the ancient cobbles providing a deafening clatter.

The hairs on the back of my neck stood up in fear as the phalanxes of troops roared “Hurrah” in response to their commander in chief.

And the sight of combat drones being paraded on their launchers was actually quite sickening. Weapons that have been at the forefront of Russia’s invasion of Ukraine were paraded in a show of pomp and patriotism.

Russian President Vladimir Putin and his Chinese counterpart Xi Jinping
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Xi Jinping and Vladimir Putin watch the procession. Pic: Reuters

Ukraine war latest: Putin welcomes Xi at Victory Day parade

For the rest of Europe, the 80th anniversary of the end of the Second World War has been a celebration of peace, but this felt much more like a celebration of war.

And it wasn’t just military hardware on display here, but the very identity of modern Russia.

A general view shows Red Square during a military parade on Victory Day, marking the 80th anniversary of the victory over Nazi Germany in World War Two, in central Moscow, Russia, May 9, 2025. Vladimir Astapkovich/Host agency RIA Novosti/Handout via REUTERS ATTENTION EDITORS - THIS IMAGE WAS PROVIDED BY A THIRD PARTY.
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Pic: Reuters

For this is a country that is now defined by its military and its memory. The glory and sacrifice of 1945 have been weaponised to give credence to Russia’s current course and to make people believe that victory is their right.

For Russians, it served as a rallying cry and there was applause when the troops who have fought against Ukraine marched past.

But for those watching in Kyiv and other European capitals, it was an overt warning that Moscow has no intention of backing down.

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Putin hails sacrifice of Russian troops

The parade was considerably larger in scale than in recent years, when units and hardware have been needed on the battlefield. I think it was a deliberate attempt to project an image of confidence, and so was Vladimir Putin‘s positioning of his guests.

China’s Xi Jinping was given a prime position on the Kremlin leader’s right-hand side. It was no surprise given the economic lifeline Beijing has provided, but it felt like a particularly pointed gesture to the West – that they were looking at a new world order.

Despite that appearance of confidence, there were signs of Moscow’s unease that the parade could be disrupted.

There were snipers on every rooftop. Security was extremely tight. And the mobile internet signal across the city centre was completely shut down for fear of Ukrainian drone attacks, meaning none of the international media that had gathered could broadcast any live transmissions.

After the parade finished, Putin saluted the crowds as they spontaneously erupted into rhythmic shouts of “Rus-si-ya” at the sight of him.

Another PR coup complete without interruption, he will have departed as a very happy man.

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