US inflation to edge up as Powell shifts on job market

A key US inflation gauge probably ticked higher last month, underscoring the challenge Federal Reserve Chair Jerome Powell and his colleagues face in balancing rising prices and mounting risks in a fragile job market. A report Friday is forecast to show the personal consumption expenditures price index excluding food and energy - the Fed's preferred measure of underlying inflation - rose 2.9% in July from a year ago. That would be fastest annual pace in five months. On a monthly basis, the so-called core measure is seen climbing 0.3% for a second month.

Speaking Friday at the Fed's annual conference in Jackson Hole, Powell said there's now a greater risk the job market could falter - although concerns over inflation persist. And while he said the effects of higher tariffs on prices are "now clearly visible," it's also reasonable to expect the impact will be short-lived.

Investors will monitor comments from Fed officials at public events in the coming week to gauge their appetite for a September rate cut. Governor Christopher Waller and regional Fed bank presidents John Williams, Lorie Logan and Tom Barkin are all scheduled to speak.


Along with the July inflation data, Friday's report is projected to show the biggest advance in household spending on goods and services since March. Economists will also look at the personal income data to gauge the ability of consumers to continue spending - a key driver of growth.

On Thursday, the US issues revised second-quarter gross domestic product data. The GDP report is forecast to show personal consumption picked up to a moderate pace after a sluggish start to 2025.

Further north, Canada's second-quarter GDP figures on Friday could show the negative effects of the trade war with the US - just as Ottawa extends a tariff olive branch to President Donald Trump.

Bloomberg Economics sees output falling amid a worsening trade balance and destocking of inventories. The median estimate is for a 0.7% decline. Elsewhere, India also reports GDP for second quarter, South Korea and Philippines set interest rates, and Germany's Ifo report will hint at how businesses in Europe's largest economy are responding to trade turmoil. Bloomberg