The Personal Consumption Expenditures index, a key inflation gauge used by the Federal Reserve to make interest-rate decisions, held steady in July according to new data from the Department of Commerce. He should be shouted.

     Prices across the U.S. rose at an annual rate of 2.6% last month, the same as in June and in line with economist forecasts. Core inflation, which excludes the more volatile food and energy categories, rose 2.9% from a year ago, up slightly from June's 2.8% and the highest since February, according to the report. 

     The figures illustrate why many Fed officials have been wary about cutting their benchmark interest rate. While inflation is much lower than the roughly 7% peak it reached three years ago, it remains above the central bank's 2% target.  

     Meanwhile, the report showed that consumer spending increased by 0.5% from June to July, the biggest increase since March, indicating that Americans are not pulling back on purchases, despite looming economic uncertainty. Spending jumped sharply for long-lasting goods such as cars, appliances and furniture, many of which are imported.

     Harry Chambers, assistant economist at Capital Economics, said in a research note that the rise in the core inflation measure was due to a rise in core services, which rose 0.3% on a monthly basis. That suggests tariffs are having a "minimal impact on goods prices," he wrote.