US June core PCE inflation slows to 0.1% MoM, services gauge drops sharply

A key gauge the Fed has flagged – PCE services excluding energy and housing – slowed to 0.1% from 0.5% in the prior month. That measure strips out some of the stickiest components and gives a cleaner read on underlying domestic price pressures.

The dollar was mostly lower in early North American trading after the print, with traders citing the soft core monthly figure and the steep drop in services inflation as reinforcing the case for the Fed to begin cutting rates. Forex market analysis showed the greenback losing ground against most major counterparts.

The data come ahead of the July employment report due August 7, which will provide the next major test for the rate path. The core services inflation reading of 0.1% – half the 0.2% monthly pace that the Fed has said is consistent with its 2% target – marked the smallest increase since early 2021.