U.S. June Inflation Slows but Outlook Turns Grim Amid Middle East Conflict

U.S. inflation PCE price index Federal Reserve Middle East conflict gasoline prices

The U.S. Personal Consumption Expenditures (PCE) price index rose 3.7% year‑over‑year in June, down from a 4.1% gain in May. On a month‑to‑month basis the index slipped 0.1%, the weakest reading since April 2020. Excluding food and energy, the core PCE index edged up 0.1% month‑over‑month and was 3.3% higher than a year earlier.

The Federal Reserve left its benchmark overnight rate unchanged at 3.5%‑3.75%, with three governors dissenting in favor of a quarter‑point hike. Chairman Kevin Warsh emphasized the Fed’s unwavering commitment to bring inflation back to the 2% target.

Oil prices rose after a brief cease‑fire in the Middle East collapsed; Brent crude hovered just above $90 a barrel and U.S. gasoline prices returned to over $4 per gallon. Consumer spending grew 0.3% month‑over‑month (0.4% after inflation), personal income rose 0.2%, and the saving rate fell to 2.7%, its lowest level since June 2022. Analysts expect the moderation to be temporary if the conflict escalates again.

Entities: Brent crude oil · Federal Reserve · Kevin Warsh · Personal Consumption Expenditures Price Index · United States

Claims

What the coverage asserts, and how well corroborated each claim is across sources.

[● 2 SOURCES] Brent crude oil prices were just above $90 per barrel in June 2024 amid renewed Middle East hostilities. (Market data cited in Reuters reports)
[● 3 SOURCES] Core PCE inflation (excluding food and energy) rose 0.1% month‑over‑month and 3.3% year‑over‑year in June 2024. (U.S. Commerce Department data)
[○ 1 SOURCE] Three Federal Reserve officials dissented from the majority, favoring a quarter‑point rate hike. (Federal Reserve meeting record)
[● 2 SOURCES] Fed Chair Kevin Warsh said the Fed would not waver in its commitment to bring inflation back to the 2% target. (Remarks at a news conference)
[● 3 SOURCES] The Personal Consumption Expenditures (PCE) price index increased 3.7% year‑over‑year in June 2024. (U.S. Commerce Department data)
[● 2 SOURCES] The Federal Reserve kept its benchmark overnight interest rate unchanged at 3.5%‑3.75% on July 31, 2024. (Federal Reserve policy decision)
[● 2 SOURCES] U.S. gasoline prices rose back above $4 per gallon in June 2024. (Energy price data cited in Reuters reports)
[● 3 SOURCES] The PCE price index fell 0.1% month‑over‑month in June 2024. (U.S. Commerce Department data)