The core index that omits energy and food costs also rose by 0.3% in June, but the annual rate ticked up to 2.8% from 2.7% and slightly above forecasts. Personal spending rose by 0.3%, below the 0.4% forecast but still suggesting consumers are willing to continue shopping.

Federal Reserve Chair Jerome Powell said interest rates are in the right place to manage continued uncertainty around tariffs and inflation, tempering expectations for a rate cut in September.

President Trump wants the Fed to slash borrowing costs, but the central bank is unlikely to take such aggressive steps even once it begins to lower interest rates.

Surprisingly weak July hiring data released on Friday highlighted a fractious Federal Reserve debate over whether the central bank should have cut interest rates when it met this week, as it offered some support to those who’d favored an easing in borrowing costs.

If you look at the labor market, what you see is, by many, many statistics, the labor market is kind of still in balance,” Powell said. While demand for workers is slowing, t

"With economic growth slowing this year and signs of a less dynamic labor market, I saw it as appropriate to begin gradually moving our moderately restrictive policy stance toward a neutral setting," Fed Vice Chair for Supervision Michelle Bowman said in a statement.