Dallas Fed Trimmed Mean PCE Rises to 2.2% from 1.5%
The Dallas Fed's trimmed mean PCE accelerated to 2.2% in July, moving back above the 2% level and signaling underlying inflation remains sticky despite lower headline figures.
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The Dallas Fed's trimmed mean PCE inflation measure rose to 2.2% in July from 1.5% in June, the bank reported. The print moves back above the Federal Reserve's 2% target after dipping below it in June.
The trimmed mean strips out the largest and smallest price changes to show the underlying trend. Headline PCE ran at 3.7% year over year in July, while core PCE was 3.3%. The trimmed mean's acceleration to 2.2% puts it above the Fed's target for the first time in two months.
The Dallas Fed's methodology removes 24% of the lowest price changes and 31% of the largest gainers by expenditure weight, leaving the middle 45% of components. Of the 176 line items in the PCE report, nearly two-thirds of categories rose while roughly one-third declined, the bank said. Fifty-seven categories posted increases of at least 5%, compared with 36 categories where prices fell at least 5%.
The largest declines were concentrated in cookware, hotels, gasoline, vehicle rentals, fresh vegetables and transportation services. The biggest gains appeared in digital video products, lubricants, household and furniture repairs, recreational books, watches and computer equipment. The bank noted that some of the figures, such as +131.4% or -34.5%, are likely one-month changes expressed at an annualized rate.
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