Independent inflation data provider Truflation estimates the U.S. core Personal Consumption Expenditures (PCE) price index rose 0.2% month-over-month in July, with the annual rate holding at 3.3%.
Headline PCE is projected to remain unchanged at 3.7% year-over-year, up 0.19% from June. The data, released by the Bureau of Economic Analysis on Wednesday, follows a 0.6% decline in retail sales for July—the first drop in nine months—amid shifting consumer behavior.
Truflation’s projection aligns with market pricing indicating a 65% probability the Federal Reserve will maintain its benchmark rate at the September meeting. Probabilities for a rate hike by October and December stand at roughly 40% and 45%, respectively, according to current market-implied expectations.
Sectoral inflation pressures varied in July, with utilities rising 7.64% year-over-year—the highest since mid-2024—driven by elevated electricity demand linked to artificial intelligence infrastructure. Transportation services increased 12.25% annually, while food services and accommodations rose 3.61%. Gasoline prices fell 3.36% month-over-month, easing some cost pressures.
Wage growth remained elevated at 4.0% to 4.5%, though retailers reported softer demand. Walmart posted its slowest sales growth in six years, while Lowe’s highlighted increased consumer caution. The data suggests middle- and lower-income households are prioritizing essential spending amid persistent inflation and higher fuel costs.
Truflation reiterated its view that the Fed is unlikely to raise rates for the remainder of 2024, despite some market expectations for a potential hike later in the year.
