Income & Spending (June)

Core PCE prices increased by 0.18% m/m in June, largely as expected and, although May's increase was revised up slightly to 0.13%, from 0.08%, that still means inflation has been running at a target-consistent pace for the past two months. The 12m annual core inflation rate remained unchanged at 2.6%, but the three-month annualised rate dropped back to 2.3%, from 2.9%. The Fed will also be reassured to see core services ex. housing coming in at 0.18% m/m last month, following a 0.17% gain in May, suggesting that the labour market rebalancing is now having a more marked downward impact on labour-intensive services components.