Consumer Inflation Cools as PCE Prices Edge Lower
U.S. consumer inflation eased in June as the Federal Reserve’s preferred inflation gauge posted its first monthly decline in several months, while separate data showed economic growth lost momentum during the second quarter.
Figures released by the Commerce Department showed the personal consumption expenditures (PCE) price index fell 0.1% in June after an upwardly revised 0.5% increase in May.
The reading matched economists’ expectations, following the previously reported 0.4% monthly increase in May.
On an annual basis, the PCE price index slowed to 3.7% in June from 4.1% the previous month, also in line with market forecasts.
Core Inflation Continues to Moderate
Excluding the more volatile food and energy categories, the core PCE price index increased 0.1% during June after rising 0.3% in May.
Economists had expected a monthly increase of 0.2%.
Annual core inflation eased slightly to 3.3% from 3.4%, matching consensus estimates.
The PCE inflation measures are closely monitored by the Federal Reserve when assessing the outlook for monetary policy.
Personal Income and Spending Continue to Grow
The Commerce Department also reported continued gains in household income and consumer spending, although both measures slowed compared with the previous month.
Personal income rose 0.2% in June after increasing 0.7% in May.
Meanwhile, personal spending advanced 0.3%, easing from the 0.9% growth recorded a month earlier.
US Economy Expands at a Slower Pace
A separate Commerce Department report showed the U.S. economy grew more slowly than expected during the second quarter of 2026.
Real gross domestic product expanded at an annualized rate of 1.5%, down from 2.1% growth in the first quarter and below economists’ expectations of 2.3%.
According to the report, the moderation in economic growth reflected weaker government spending, slower investment activity and softer export growth.
Those factors were partially offset by stronger consumer spending, while higher imports—which reduce GDP calculations—also weighed on overall economic growth during the quarter.