Fed’s preferred inflation gauge shows core prices rose 3.3% annually in July

Prices consumers pay for a variety of goods and services rose slightly in July, according to the Federal Reserve's main inflation gauge.

The personal consumption expenditures price index, which the Fed uses as its preferred forecasting tool, increased a seasonally adjusted 0.2% for the month, putting the annual inflation rate at 3.7%, the Commerce Department reported Wednesday. Both were 0.1 percentage point above the Dow Jones consensus.

But stripping out volatile food and energy costs, core PCE posted respective gains of 0.2% and 3.3%, in line with forecasts. While the Fed considers both measures, policymakers generally see core inflation as the better measure of longer-term trends.

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