PCED Inflation Rate Still On Moderating Course

Both the headline and core PCED inflation rates rose 0.2% m/m in July. Fed Chair Jerome Powell anticipated that they would be moderate as they were in June in his Jackson Hole speech on Friday of last week. However, he said that two consecutive months of such moderation aren't enough. He wants to see inflation drop closer to the Fed's 2.0% target on a y/y basis. The headline and core PCED inflation rates were 3.3% and 4.2% on a y/y basis during July. He is focusing on the core rate, which by the way rose at just an annualized 2.9% rate over the past three months (chart).

STOP THE PRESSES: July's PCED was boosted by an odd 7.4% m/m jump in portfolio management fees. While it only accounted for 1.62% of consumer spending last month, it added 0.12 to the monthly increase. That's more than half! This item is not shown as a separate category in the CPI, but it did also show up in the PPI as a 7.6% m/m increase.