Rates Drop Again As Fed’s Preferred Inflation Gauge Is Flat In July. Savings Rate Up To 5.9%. (TABLE)

Rates are down this morning on continued fears of a double dip recession and the latest inflation report confirming tame prices. Overall Personal Consumption Expenditures, the Fed’s favorite measure of consumer inflation, were 0.2% in June and 1.5% year-over-year through June. Excluding volatile oil and food costs from the readings, “Core” PCE price index was 0.1% for June and 1.4% YOY through June. The Fed looks closely at Core PCE excluding food and energy prices because of the price volatility of these two items, and the Fed’s zone for reasonable inflation is 1-2% per year. At 1.4%, Core inflation is within their comfort zone, and PCE inflation has been stable for a year. Mortgage bonds are rallying once again to record levels, which pushes rates down to new record lows.

Personal income was up 0.2% in July, which is the same range of the last 6 months. Wages rose 0.3%, which is roughly the same monthly level for all of 2010. The household savings rate was 5.9%, which is down from the May 2009 all-time record of 6.9%. Below are all key details from the Personal Income & Outlays report. You can automatically create charts and download historical PCE data by scrolling to our data section on the right side of the site, or visiting our Data page.