Inflation tracker Truflation projected the U.S. core personal consumption expenditures price index to rise 0.2% month-over-month in July, maintaining a 3.3% annual rate. The headline PCE measure was seen steady at 3.7% year-over-year, with a 0.19% monthly increase.
The firm said the Federal Reserve is likely to leave interest rates unchanged at its September meeting and is unlikely to raise borrowing costs for the remainder of the year. Market pricing reflects a 65% probability of no change in September, while around 40% of traders bet on a hike by October and 45% by December.
Truflation highlighted rising utility costs driven by artificial intelligence demand, which pushed electricity prices up 7.64% year-over-year—the highest since mid-2024. Transportation services increased 12.25% annually, while dining and lodging rose 3.61%. Gasoline prices fell 3.36% month-over-month. Wage growth remained in a 4.0% to 4.5% range.
Tariffs continued to contribute to recurring price adjustments, and geopolitical tensions in the Middle East added pressure to jet fuel, freight, and shipping costs. Retail sales unexpectedly declined 0.6% in July, marking the first drop in nine months and signaling early consumer strain.
Large retailers reported softer demand. Walmart posted its slowest sales growth in six years, reflecting caution among middle- and low-income households amid persistent inflation and fuel expenses. Lowe’s results similarly pointed to selective spending patterns.
Truflation reiterated its stance in its monthly report, stating that despite market expectations, its view remains that the Fed will hold rates steady in September and is unlikely to hike for the rest of the year.
