US Core Inflation Stays Elevated as Consumer Spending Stalls in July

US inflation remained elevated in July even as consumer spending stalled, adding to signs that the economy is cooling but not yet back to the Federal Reserve’s 2% target. The Fed’s preferred inflation measure, core PCE, rose 0.2% on the month and 3.3% from a year earlier, while inflation-adjusted consumer spending was flat after stronger gains in May and June. Separate government figures also showed second-quarter U.S. GDP growing at an annualized 1.5%, with the underlying details revised to show stronger spending and business investment than first reported. Together, the reports suggest inflation is easing only gradually and that household demand is losing momentum, factors likely to influence the Fed’s next policy decisions.