Annual core inflation climbed by 3.3% in July

Aug. 26 (UPI) — Core personal consumption expenditures, a key measure of inflation for the Federal Reserve, increased by 3.3% on an annual basis in July, the Bureau of Economic Analysis reported Wednesday.

The annual reading excludes volatile food and energy but with those items counted personal consumption expenditures rose 3.7%. On a month-to-month basis, core inflation was up 0.2% over June.

July’s inflation report for total and core inflation were 0.1% higher than the Dow Jones consensus projected.

The monthly reading of personal income increased by $115.1 billion, a 0.4% rate, while disposable income jumped by $125.9 billion or 0.5%.

With incomes up, spending also rose, climbing 0.2% for the month. Consumer spending notched a $36.3 billion increase. Both incomes and spending figures were higher than the Dow Jones consensus forecast.

“The increase in current-dollar personal income in July primarily reflected increases in compensation, government social benefits and personal income receipts on blockets,” the report said.

Spending for financial services and insurance reported the greatest change in monthly spending, up by $24.3 billion, followed by $23.2 billion for health care and $16.4 billion for housing and utilities services.

On the other hand, spending on gasoline and energy goods fell by $14 billion, the largest decline in spending to either a goods or services category. Spending on recreational goods and vehicles declined by $13.6 billion and motor vehicles and parts fell $9.4 billion.

The Federal Open Market Committee will make its next interest rate decision in September after it meets on Sept. 15 and 16.