US Inflation Pressure Remains High Despite Summer Price Trends

Summer price indicators showed better-than-expected performance, but U.S. underlying inflation pressures remain high, according to Federal Reserve Chair Kevin Warsh. Speaking on July 28, Warsh noted that while this summer's PCE and CPI data came in better than anticipated, it does not indicate a meaningful improvement in the underlying trend. He emphasized that the Fed's price target remains fixed at 2%, citing a 3.7% annual increase in the personal consumption expenditures (PCE) price index and a 4.1% six-month rise. Warsh added that 54% of the 199 PCE components recorded price increases exceeding 3% over the past year, compared to 32% during the previous two decades before the pandemic.