Minneapolis (CNN Business) — The Fed’s favorite inflation gauge showed increases taking a breather last month as energy prices continued to slide from record highs. However, Fed Chairman Jerome Powell mentioned “pain” twice when discussing the future of the US economy.

The personal consumption expenditures price index rose 6.3% for the year ended July, down from a 40-year high of 6.8% recorded in June, according to data released by the Bureau of Economic Analysis ( BEA, for its acronym in English). In month-on-month terms, the PCE price index fell 0.1%.

This decline was largely expected, as the July Consumer Price Index, another important indicator of inflation, also showed a slowdown in price increases. The most significant change: Energy prices fell sharply last month.

The latest data from the BEA reflect this decline. In June, energy prices rose 43.4% from the prior year period. Last month, that annual increase was 34.4%.

Despite that decline, prices remain elevated, said Scott Brave, an economist specializing in consumer spending at Morning Consult.

“American consumers received a welcome reprieve from the sting of inflation in July as gasoline prices fell significantly,” it said in a statement. “But at more than 6%, inflation is still too high to provide lasting comfort.”

Excluding more volatile food and energy prices, the core PCE index rose 4.6% from a year ago.

Powell warns of “some pain” for households and businesses

Investors who had expected Federal Reserve Chairman Jerome Powell to make dovish comments on Friday were disappointed. Instead, Powell mentioned “pain” twice in predicting the future of the US economy.

“While higher interest rates, slower growth and softer labor market conditions will bring inflation down, they will also bring some pain to households and businesses,” Powell said in his annual Jackson policy address. hole.

The Fed raises interest rates again by 0.75% 0:59“These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean much greater pain.”

Powell hinted that the Fed will continue its historic pace of rate hikes for the foreseeable future until it can bring inflation back to normal levels.

“We are taking strong and rapid action to moderate demand, so that it is better aligned with supply, and to keep inflation expectations anchored,” he said. “We’ll keep at it until we’re sure the job is done.”