Fed's preferred inflation gauge cools in July

With intense focus on the Federal Reserve's exit strategy for its bond-buying program, new data released Friday showed the Fed's preferred measure of inflation remains hot, but may be near its peak.

The Personal Consumption Expenditures price index, or PCE, excluding food and energy rose 0.3 percent in July, which was lower than the 0.5 percent gain in June.

Annually, so-called core-prices saw a 3.6 percent surge in July, which was similar to the rise seen the month before.

Some Fed watchers may see that as a support to the Fed's idea that the recent surge in inflation - fueled largely by supply constraints tied to the economic reopening is - in the Fed's words: transitory.

Inflation may be cooling off and so the consumer.

Consumer spending slowed in July, according to the Commerce Department, with auto sales still crimped by the lack of available cars.

Credit card data suggests spending on travel has been slowing this month as the health crisis picks up.

But the overall economic recovery, although likely slower in recent weeks, remains largely intact...

Something the Fed will have to take into account as it tries to decide when to start removing some of the extraordinary assistance it had been providing to give the recovery time to spread throughout the economy.

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