The drop in the so-called personal-consumption price index was the first since April 2020. The rate of inflation over the past year dropped to 6.3% from 6.8% in the prior month. Economists polled by The Wall Street Journal had predicted no change in July. A narrower measure of inflation that omits volatile food and energy costs, known as the core PCE, edged up 0.1%. The Federal Reserve views the PCE index as the best barometer of inflation trends. The Fed is raising the cost of borrowing to try to slow demand in the economy and drive inflation lower. But the Fed’s newly aggressive posture, however, threatens to tip the economy into a second recession in three years. . . .
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