July PCE Inflation Forecast: Truflation Sees Persistent Pressures, No Fed Hike This Year – News and Statistics – IndexBox

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According to Truflation, persistent underlying U.S. inflation is likely to continue when the Bureau of Economic Analysis issues its July Personal Consumption Expenditures Price Index on Wednesday, though the pressure may not be strong enough to push the Federal Reserve toward a rate increase this year.
Investing.com’s preliminary assessment of the independent inflation data provider’s projections indicates that the headline PCE is anticipated to remain unchanged at 3.7% on an annual basis, with a 0.19% monthly uptick, closely matching market consensus. The core PCE is expected to advance 0.2% month over month, keeping the yearly rate at 3.3%.
Truflation reiterated that, irrespective of market sentiment, its outlook remains steady: the Fed is expected to keep rates unchanged at its September gathering and is not anticipated to raise borrowing costs for the rest of the year. Market pricing shows a 65% likelihood of a pause in September, with about 40% odds of a hike by October and 45% by December.
The firm highlighted four rising risk areas: tariffs emerging as a persistent trigger for price adjustments rather than a temporary effect; the Middle East situation driving up costs for jet fuel, freight, and transport; wage growth continuing in the 4.0% to 4.5% range; and electricity demand fueled by artificial intelligence, with utility prices climbing 7.64% year over year, marking the steepest increase since mid-2024.
Breaking down categories, transportation services rose 12.25% annually, while food services and accommodations gained 3.61%, and gasoline prices dropped 3.36% month over month. On the consumer front, Truflation observed that retail sales unexpectedly declined by 0.6% in July, marking the first fall in nine months, and noted that early indications of consumer stress are surfacing.
Large retailers, including Walmart and Lowe’s, have reported that shoppers are becoming more cautious and discerning. Walmart experienced its weakest sales growth in six years, pointing to reduced spending among middle- and lower-income households as inflation and higher fuel costs continue to squeeze disposable income, the firm said.
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