Fed's favored inflation gauge rose more than expected in July

close video Inflation impacts consumer spending at Iowa State Fair Fox Business Grady Trimble reports from the Iowa State Fair where local vendors and fairgoers share how inflation impacts consumer spending. Despite rising costs, visitors remain resilient. This story about the July 2026 PCE inflation report will be updated with further details. The Federal Reserve's preferred  inflation gauge rose slightly in July as the pace of price growth remained well above the central bank's target ahead. The Commerce Department on Wednesday reported that the  personal consumption expenditures (PCE) index rose 0.2% from a month ago and was up 3.7% on an annual basis in July. Both figures were hotter than the expectations of economists polled by LSEG, who projected readings of 0.1% and 3.6%, respectively. Core PCE, which excludes volatile measurements of food and energy prices, was up 0.2% on a monthly basis and is 3.3% higher than last year. Both figures were in line with the estimate of the LSEG poll. What experts are saying What does it mean for the Fed and interest rates? What does it mean for the market?