Federal Reserve member calls recent inflation data encouraging

The June Consumer Price Index dropped to 3.5% on a year-over-year basis, down from 4.2% in May. Austan Goolsbee, President of the Federal Reserve Bank of Chicago, described the latest inflation print as “surprisingly benign” and “encouraging,” though he added that several more months of similarly positive readings are needed before anyone can declare victory over persistent price pressures. The numbers behind the optimism For context, July marked the 65th consecutive month that inflation has exceeded the Fed’s 2% benchmark. The Fed’s preferred inflation gauge, the Personal Consumption Expenditures index, held at 3.7% in July, with core PCE (which strips out volatile food and energy prices) sitting at 3.3%. What’s been keeping inflation elevated Tariff effects have rippled through supply chains, adding costs that businesses have passed along to consumers. Energy prices, spiking amid ongoing Middle East tensions, have contributed their own upward pressure on the headline numbers. AI-related capital expenditure has also been adding to inflationary dynamics as companies pour billions into compute infrastructure, data centers, and the electricity to power them. The May PCE peak of 4.1% ...