U.S. personal income increased 0.4% month-over-month in July, the Commerce Department reported on Wednesday, outstripping the median forecast of a 0.2% rise among economists. The gain followed a revised 0.2% increase in June.
Private consumption expenditures rose 0.2% last month, also exceeding expectations for a 0.1% gain and accelerating from June’s 0.3% increase. The data underscores sustained consumer demand amid a tightening monetary policy backdrop.
The Federal Reserve’s preferred inflation gauge, the personal consumption expenditures price index, held steady at 3.7% year-over-year in July, unchanged from June and above the 3.6% forecast. On a monthly basis, the PCE index increased 0.2%, matching the prior month’s pace but surpassing projections. The core PCE index, which excludes volatile food and energy prices, remained at 3.3% year-over-year, in line with expectations.
The PCE data, closely monitored by markets for its implications on Fed policy, indicates persistent inflationary pressures. The central bank has maintained its benchmark interest rates at current levels in recent meetings, with policymakers emphasizing the need for further progress toward the 2% inflation target.
