Consumers paid slightly more for goods and services in July, according to the latest data from the Federal Reserve’s favorite inflation tracker. The personal consumption expenditures price index climbed 0.2 percent for the month, bringing the annual inflation rate to 3.7 percent. These figures came in slightly higher than what analysts had predicted, though the underlying trend remained steady when looking at core prices.

When removing the unpredictable swings of food and energy costs, core inflation rose 0.2 percent for the month and 3.3 percent over the year. This core figure aligns closely with expectations and is generally viewed by policymakers as a more reliable indicator of long term economic health. Interestingly, while overall prices ticked upward, some sectors saw relief; goods prices actually dipped by 0.1 percent thanks to lower gas prices and cheaper home furnishings. Conversely, service costs continued to climb, driven largely by increases in insurance and housing.

The broader economy appears resilient despite these inflationary pressures, as both personal income and consumer spending grew faster than anticipated last month. However, this persistence keeps the Federal Reserve in a difficult position since inflation remains well above its desired two percent target. Financial markets are currently bracing for future moves, though most traders do not expect another interest rate hike until December given that there is no formal committee meeting scheduled for August.

Attention now shifts to Jackson Hole, Wyoming, where Fed officials are gathered for their annual symposium. All eyes are on Chairman Kevin Warsh, who is expected to deliver a key policy speech on Friday. His remarks arrive at a tense moment for government bonds, as yields on ten and thirty year Treasurys have surged to levels not seen since just before the 2008 financial crisis due to lingering concerns over national debt and inflation targets.