The price of goods and services rose 0.4% in June, slowerthan the 0.5% growth during May, according to the core personal consumption expenditures (PCE) price index released Friday morning. The June reading was lower than the consensus expectation for 0.6% growth.
Why it matters: The core PCE is the inflation measure the Federal Reserve watches most closely. June's reading is the second month in a row of decelerated price growth, giving the Fed breathing room to design a pullback strategy from its emergency market support.
On an annual basis, the core PCE reading grew 3.5% as of June, compared to 3.7% expectations and 3.4% a month ago.
The big picture: Fed chair Jerome Powell acknowledged the continuing inflation at a Wednesday press conference, but said he still views much of it as transitory and a result of bumps in the road from reopening the economy.
- Powell said earlier this month that if inflation starts running too hot, the Fed would consider taking action.
- The central bank's latest forecast for full-year 2021 core PCE inflation is 3.0%.