It's important to remember that this is a one-month measure that's annualized. One-month July inflation in the main report was -0.1% so +3.4% annualized is still far above that.

The 12-month Dallas Fed PCE trimmed mean was 4.4% vs 4.4% prior. The six month declined to 4.3% from 4.8%.

From the chart, you can see some downward momentum and that will likely continue in August with gasoline prices falling.

Dallas Fed trimmed

Some of the fastest-falling items:

Dallas Fed highlights 1

Fastest-rising items (note the first two, which are the two most-essential things in any household):

Dallas Fed highlights 2

What also shocks me about this report is the amount that Americas spending on gambling and lotteries. It's nearly a full percentage point of spending, which is more than "Men's and boys' clothing" or "Sporting equipment, supplies, guns, and ammunition".

That's a gambling problem and doesn't even include all the gambling that goes on in the stock market .

Somehow there was also a negative 0.2 pp annualized contribution to the cost of gambling and lotteries, which makes no sense.