(CTN News) – The rate of inflation in the United States is progressively falling, as indicated in a study that was made public on Friday.

However, the rate of inflation is not decreasing sufficiently for the Federal Reserve to begin reducing interest rates the following week. The report was just made public.

“Personal Consumption Expenditures (PCE) continued to fall in June 2024, increasing Federal Reserve confidence that inflation is on track to reach the 2-percent target,” stated Dana Peterson, chief economist at The Conference Board.

” The Fed is getting more confident inflation will hit its target.”

“The PCE price index is a measure of the price of personal consumption expenditures.”

“The PCE price index is a measure of the general level of consumer spending.”

There has been a noteworthy development in the fact that the prices of housing, which constitute a significant component of the inflation rate from one year to the next, continue to decrease. On the other hand, she brought up the fact that the costs of fundamental services are still being fixed, which is a factor that is inhibiting progress from having taken place.

Statistics that were released by the Department of Commerce on Friday revealed that the core PCE price index, which is the preferred annual inflation measure of the Federal Reserve, remained stable at 2.6% over the entirety of the month of June.

This was evidenced by the fact that the index remained unchanged throughout the entire month. In June, the core PCE price index climbed by 0.2%, building on the momentum that was established by the 0.1% gain that occurred the previous month. A 0.1% increase in inflation was recorded in May.

This inflation growth occurred after the index had already increased.

The PCE price index, which takes into account both food and energy costs, reported annual growth of 2.5% in June, which is a slight decrease from the 2.6% annual gain that it obtained in May.

This represents a decline from the annual gain of 2.6% that it demonstrated in the month of May. The index experienced a monthly gain of 0.1% for the month of June, after a month in which it stayed steady during the entirety of the time period taken into consideration.

A slower rate of progress was observed as a consequence of the fact that real consumer expenditures were lower at the beginning of the third quarter compared to what they had been in the previous month.

Due to the fact that the previous month had taken place, this was the situation. As an additional point of interest, Peterson asserts that consumers are concentrating their spending on essentials rather than fantasies when it comes to their acquisitions.

When compared to the previous month, the rate of growth in personal income and personal spending among Americans slowed down by a significant amount during the month of June.

Inflation prevailed throughout the month.

The latter experienced a monthly rise of 0.4% during the month of May, but it slowed down to a gain of 0.3% over the course of June than it had been experiencing throughout the month of May.

Although Peterson claimed that the Federal Reserve “should be pleased with much of the details of” the report, he also stated that this is not sufficient to warrant a rate cut the following week. Peterson’s statement was made in reference to the study.

According to the forecast made by the economist, “Consumer spending slowed at the end of the second quarter, suggesting that there may be a cooling in domestic demand in the third quarter, which should help moderate inflation.”

According to the economist, the Federal Reserve should calibrate not only the sequencing but also the size of rate reductions.

“Waiting too long may lead to excessive stress for consumers, while going too quickly may lead to a rise in inflation, which also harms consumers.”

SOURCE: AAN