The July Personal Income and Outlays report from the U.S. Bureau of Economic Analysis showed that the headline personal consumption expenditures (PCE) price index rose by 3.7% year over year, unchanged from June but slightly higher than expectations of 3.6%. Core PCE inflation (excluding food and energy prices) increased 3.3% year over year, in line with expectations and unchanged from June.
The ABA Office of the Chief Economist believes the July data highlights the persistence of inflationary pressures and the lack of progress towards the Federal Reserve’s 2% target for both headline and core inflation. Persistent price growth continues to pressure household balance sheets. Over time, this could weigh on consumer loan performance as borrowers face greater difficulty managing rising costs.
