the numbers a key gauge of us inflation fell in july for the first time in more than two years thanks to tumbling gas prices giving americans some relief from a rapidly rising cost of living the decline in the socalled personalconsumption price index was the first since april 2020 when the us economy was locked down after the initial outbreak of the coronavirus economists polled by the wall street journal had predicted no change in july a narrower measure of inflation that omits volatile food and energy costs known as the core pce edged up 01  that was below wall street’s 02 forecast key details the rate of inflation over the past year dropped to 63 from 68 in the prior month the core rate of inflation edged down to 46 from 48 in the 12 months ended in july it had touched a 40year high of 53 in february the federal reserve views the pce index as the best barometer of inflation trends unlike it’s betterknown cousin the consumer price index the pce gauge takes into account how consumers change their behavior in response to higher prices they might substitute cheaper goods such as ground beef for more expensive ones like ribeye to keep their costs down for example the cpi showed inflation rising at a 85 yearly rate in july down from a nearly 41year high of 91 in the prior month big picture the economy has slowed because of the squeeze on consumers from high inflation as well as rising us interest rates the federal reserve is raising the cost of borrowing to try to slow demand in the economy and drive inflation lower the fed’s newly aggressive posture however threatens to tip the economy into a second recession in three years market reaction the dow jones industrial average djia and sp 500 spx were set to open lower in friday trades