The Personal Consumption Expenditures Price Index, the Federal Reserve's preferred inflation gauge, increased 3.7% in the 12 months through July, unchanged from June. This figure exceeded economists' forecast of 3.6%. On a month-over-month basis, PCE rose 0.2% in July, also above forecasts, after falling 0.1% in June. This sluggish pace of improvement is likely to intensify the debate within the central bank regarding further interest rate hikes.