US consumers' near-term inflation expectation lowest since 2020, UMich data shows

The University of Michigan's monthly consumer sentiment index survey showed households' one-year inflation expectation at 2.8%, down from 2.9% in July and now the lowest since December 2020. The five-year outlook for price growth was unchanged at 3.0%. The wider survey showed a modest improvement in consumer sentiment this month, with the uptick having significant political overtones as the Nov. 5 U.S. presidential election approaches.

Fed Favored Inflation Gauge’s Mild Gain Sets Stage for Rate Cut

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Instant view: No surprises from US PCE inflation to alter Fed easing path

The data looks unlikely to divert the Federal reserve, which tracks the PCE price measures as an inflation gauge for monetary policy, from lowering interest rates at least 25 basis points in September. In the 12 months through July, the PCE price index increased 2.5%, matching June's gain and beating the 2.6% gain expected by economists polled by Reuters. Excluding the volatile food and energy components, the PCE price index rose 0.2% last month, matching the increase in June.

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Fed's preferred inflation gauge shows prices increased in line with Wall Street's expectations in July

US dollar gains after inflation data

The U.S. dollar gained on Friday after data showed a key inflation measure came in line with expectations, while personal spending and income increased, reinforcing expectations that the Federal Reserve will like cut interest rates by a smaller 25 basis points next month. The personal consumption expenditures (PCE) price index rose 0.2% last month, in line with expectations, after an unrevised 0.1% advance in June, data showed. In the 12 months through July, the PCE price index increased 2.5%, matching June's gain.

Traders see Fed delivering 25 bps cut in Sept, 100 bps by year-end

Traders added to bets that the Federal Reserve will start U.S. interest-rate cuts next month with a quarter-point reduction in the policy rate, rather than a bigger half-point cut, after the U.S. central bank's preferred gauge of inflation for July showed inflation rose in line with economist expectations even as consumer spending increased solidly. Traders continued to see the Fed cutting rates by a full percentage point over the final three meetings of the year. Fed Chair Jerome Powell last week said "the time has come" to ease policy.

US consumer spending picks up; inflation rises moderately in July

U.S. consumer spending increased solidly in July, suggesting the economy remained on firmer ground early in the third quarter and arguing against a half-percentage-point interest rate cut from the Federal Reserve next month. Consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose 0.5% last month after advancing by an unrevised 0.3% in June, the Commerce Department reported on Friday. This implies that consumer spending maintained most of the momentum from the second quarter, when it helped to boost gross domestic product growth to a 3.0% annualized rate.

Futures extend gains after inflation data

U.S. stock index futures extended gains on Friday after a key inflation report showed price pressures rose almost in line with expectations in July, confirming bets on an interest-rate cut at the Federal Reserve's September meeting. The Personal Consumption Expenditure index, the Fed's preferred measure of inflation, rose 2.5% in July on an annual basis, compared with an estimate of 2.6%, according to economists polled by Reuters. On a monthly basis, it rose 0.2%.

Federal Reserve's favored inflation gauge shows price pressures easing as rate cuts near

An inflation measure closely tracked by the Federal Reserve remained low last month, extending a trend of cooling price increases that clears the way for the Fed to start cutting its key interest rate next month for the first time in 4 1/2 years. Prices rose just 0.2% from June to July, the Commerce Department said Friday, up a tick from the previous month’s 0.1% increase. The slowdown in inflation could upend former President Donald Trump's efforts to saddle Vice President Kamala Harris with blame for rising prices.