The Federal Reserve's preferred inflation gauge, the Personal Consumption Expenditures (PCE) price index, increased by a seasonally adjusted 0.2% month-over-month and 3.7% year-over-year in July. Both figures were 0.1% above economists' expectations. Core PCE, which excludes volatile food and energy prices, rose 0.2% monthly and 3.3% annually, in line with estimates. Personal income also rose 0.4% and spending increased 0.2% in the month, both higher than expected, suggesting persistent inflationary pressures.