A grocery store in San Leandro, California. [Getty Images]
A grocery store in San Leandro, California. [Getty Images]

The US Commerce Department said Thursday (local time) that the personal consumption expenditures (PCE) price index rose 3.7 percent in June from a year earlier, matching market forecasts but still exceeding the Federal Reserve's 2 percent inflation target.

The core PCE price index, which strips out energy and food, rose 3.3 percent from a year earlier and 0.1 percent from May.

The figures broadly matched economist forecasts compiled by Dow Jones. The only miss was the core index's monthly gain, which came in below the 0.2 percent consensus estimate.

The PCE index had been climbing since February, driven by a surge in global oil prices following the outbreak of war involving Iran. The June easing reflects a degree of stabilization in crude prices, as the United States and Iran entered end-of-war negotiations and imports from China declined.

Breaking down the components, service prices rose 0.1 percent from May while goods prices fell 0.6 percent. Within goods, durable goods — including vehicles and parts — were flat compared with May. Energy prices, including gasoline, plunged 9.2 percent in line with swings in global crude markets, pulling nondurable goods prices down 1.0 percent.

Within services, transportation rose 0.6 percent, healthcare 0.3 percent, and financial services and insurance 0.2 percent. Recreation fell 0.1 percent, as did food services and accommodations.

The PCE price index tracks the prices of goods and services consumed by households and serves as the Federal Reserve's preferred gauge for assessing inflation.

Personal income rose 0.2 percent in June from May, the Commerce Department also said Thursday. Nominal PCE increased 0.3 percent from May, while real PCE — adjusted for price changes — rose 0.4 percent.


kate01@heraldcorp.com