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Friday, July 30, 2021

Core PCE inflation up 3.5% in June, slightly less than expected

Personal income increased $26.1 billion (0.1 percent) in June according to estimates released today by the Bureau of Economic Analysis (tables 3 and 5). Disposable personal income (DPI) decreased $2.6 billion (less than 0.1 percent) and personal consumption expenditures (PCE) increased $155.4 billion (1.0 percent).

Real DPI decreased 0.5 percent in June and Real PCE increased 0.5 percent; goods decreased 0.2 percent and services increased 0.8 percent (tables 5 and 7). The PCE price index increased 0.5 percent. Excluding food and energy, the PCE price index increased 0.4 percen.

The increase in personal income in June primarily reflected an increase in compensation of employees. Government social benefits decreased in June (table 3). Within compensation, the increase was primarily in private wages and salaries, reflecting Bureau of Labor Statistics Current Employment Statistics. Within government social benefits, "other" social benefits decreased as economic impact payments declined. Unemployment insurance also decreased, led by decreases in payments from the Pandemic Unemployment Compensation program.

The $155.4 billion increase in current dollar PCE in June reflected an increase of $29.3 billion in spending for goods and a $126.1 billion increase in spending for services (table 3). Within goods, an increase in nondurable goods was partly offset by a decrease in durable goods. Within nondurable goods, the increase was primarily accounted for by increases in “other” nondurable goods (mainly pharmaceuticals) as well as gasoline and other energy goods. Within durable goods, the decrease was primarily in motor vehicles and parts. Within services, increases were widespread across all spending categories, led by food services and accommodations. Detailed information on monthly PCE spending can be found on Table 2.3.5U.

Personal outlays increased $158.7 billion in June (table 3). Personal saving was $1.70 trillion in June and the personal saving rate—personal saving as a percentage of disposable personal income—was 9.4 percent (table 1).

The PCE price index for June increased 4.0 percent from one year ago, reflecting increases in both goods and services (table 11). Energy prices increased 24.2 percent while food prices increased 0.9 percent. Excluding food and energy, the PCE price index for June increased 3.5 percent from one year ago.

 

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