A US <a href="https://www.thenationalnews.com/tags/inflation/" target="_blank">inflation</a> metric closely monitored by the <a href="https://www.thenationalnews.com/business/banking/2023/07/27/fed-approves-us-bank-reform-proposals-after-officials-express-scepticism/" target="_blank">Federal Reserve</a> fell last month, offering further evidence of cooling prices. The personal consumption expenditures, more commonly known as the PCE price index, rose 3 per cent on an annual basis for June, down from 3.8 per cent in May, the Commerce Department reported on Friday. It is the lowest annual level since March 2021. Month-by-month, PCE increased 0.2 per cent. Core PCE – which excludes food and energy – rose by 4.1 per cent last month, down from 4.6 per cent in May. It also gained 0.2 per cent on a monthly basis. It also increased 0.2 per cent month-by-month. The Fed closely monitors PCE inflation for its monetary policy decisions. Prices for goods slipped 0.1 per cent in June while services rose 0.3 per cent. Food prices fell by 0.1 per cent and energy prices increased 0.6 per cent. Consumer spending rose 0.4 per cent. Data released by the Labour Department on Thursday showed that consumer spending grew by 1.6 per cent in the second quarter. Friday's report is the latest sign that prices are continuing to cool since the Fed began raising interest rates last year. The Consumer Price Index (CPI) inflation sits at 3 per cent after a 9.1 per cent peak last summer. Further signs of deceleration could add to hopes that the Fed will not raise <a href="https://www.thenationalnews.com/business/economy/2023/07/28/us-economy-growth-interest-rate/" target="_blank">interest rates</a> again this year. After raising rates by a quarter percentage point on Wednesday, the Fed's chairman Jerome Powell remained coy on if the reserve plans to increase rates further this year, going only so far as to say the central bank would take a data-driven approach “meeting by meeting”. Mr Powell said he does not expect inflation to fall to the Fed's 2 per cent goal until 2025. This week's decision brought the Fed's benchmark rate to the target range of 5.25 per cent and 5.5 per cent, its highest level in more than two decades. The central bank hopes raising interest rates will slow economic activity without bringing on a recession, otherwise known as a soft landing. Still, the labour market remains tight and unemployment remains at a near-historic low, complicating their efforts. Traders expect the Fed to keep rates steady for the remainder of the year. Updated economic forecasts released by the White House on Friday showed that Consumer Price Index inflation is forecast to end the year at 3.3 per cent, slightly above June's 3 per cent reading. It is expected to remain above the Fed's 2 per cent target by end of 2024 at 2.5 per cent before a long-run 2.3 per cent rate. Revised down was the White House's unemployment forecast, reflecting greater confidence that the labour market will remain tight this year. The Office of Management and Budget now expects unemployment to reach 3.8 per cent be end of 2023, as opposed to its March estimate of 4.3 per cent. The White House expects unemployment to reach 4.4 per cent next year before winding down slightly in 2025. Meanwhile, real gross domestic product is expected to be at 0.4 per cent in 2023 and 1.8 per cent at the end of 2024. The 2023 deficit is expected to grow to $1.543 trillion, a $26 billion decrease from its previous estimate. The White House said this was largely due to the Supreme Court's ruling to strike down Mr Biden's <a href="https://www.thenationalnews.com/world/us-news/2023/06/30/supreme-court-student-loan-decision/" target="_blank">student loan forgiveness programme</a>.