The Personal Consumption Expenditures price index, the gauge used by the Federal Reserve for its target inflation rate, dropped 0.1% from May, bringing the annual rate to 3.7% from 4.1%, according to Commerce Department data.

Inflation slowdown expected to be temporary

The inflation slowdown is largely due to energy prices, notably those at the fuel pump, which tumbled amid a false dawn in the Middle East war. Gasoline and energy goods prices sank 9.2% in June, the largest monthly drop since August 2022. However, prices have since shot higher, and the national average is back above $4 a gallon.

When stripping out volatile energy and food prices, the “core” PCE index rose 0.1% on a monthly basis and was up 3.3% from a year ago.

In June, consumers increased their spending by 0.3% from the month before, with health care, motor vehicles, financial services and insurance driving the gain. When adjusting for inflation, spending was up 0.4%.

Original reporting: KTVZ (Central Oregon) — read the source article.