The Fed’s favorite inflation gauge rose last month—here’s why some economists say it’s misleading and won’t lead to more interest rate hikes

A trader works on the floor of the New York Stock Exchange, August 21, 2023. (Credit: Angela Weiss—AFP/Getty Images)

The Federal Reserve’s preferred inflation gauge edged higher last month, but the figure may be misleading. 

The personal consumption expenditures (PCE) price index, which measures the prices U.S. consumers pay for everything from clothes to medical care, rose to 3.3% in July, from 3% in June, the Bureau of Economic Analysis reported Thursday. And core PCE inflation, which excludes more volatile food and energy prices, hit 4.2% last month, compared with 4.1% in June.