Prices consumers pay for a variety of goods and services rose slightly in July, according to the Federal Reserve's main inflation gauge.

The personal consumption expenditures price index, which the Fed uses as its preferred forecasting tool, increased a seasonally adjusted 0.2% for the month, putting the annual inflation rate at 3.7%, the Commerce Department reported Wednesday. Both were 0.1 percentage point above the Dow Jones consensus.

But stripping out volatile food and energy costs, core PCE posted respective gains of 0.2% and 3.3%, in line with forecasts. While the Fed considers both measures, policymakers generally see core inflation as the better measure of longer-term trends.

The report also showed that personal income rose 0.4% while spending increased 0.2%, both stronger than expected.

Goods prices actually declined on the month, off 0.1%, driven by a 2.7% decrease in gasoline and other energy-related goods and a 0.9% drop in furnishings and long-lasting household equipment.

Services prices rose 0.3%, pushed by a 1.2% increase in financial services and insurance as well as a 0.3% gain in housing.

Stock market futures pulled back a bit after the report while Treasury yields were higher.

The report comes with Fed officials weighing their next policy move as inflation, despite generally soft monthly readings this summer, still well above the central bank's 2% goal.

With the rate-setting Federal Open Market Committee not meeting formally in August, officials have a bit of a respite before making a decision at their next gathering on Sept. 15-16. Markets are pricing in only about a 1-in-3 probability of a move then, with the best chance for a rate hike coming in December.

Though the FOMC doesn't meet, Fed officials this week gather at Jackson Hole, Wyo., for their annual symposium, the highlight being a policy speech scheduled for Friday from Chairman Kevin Warsh.

Since taking office in May, Warsh has been circumspect about where he sees policy heading, instead preferring that markets set the tone.

Government bond yields have been on the rise lately. Both the 10- and 30-year Treasurys recently saw yields hit their highest levels since 2007, just before the global financial crisis. The surge has come from a variety of factors, including investors' concern about the Fed's commitment to its inflation target as well as debt and deficit issues with the federal budget.

Treasury Secretary Scott Bessent a week ago announced an initiative in which his department would step up its buybacks of government debt. However, market participants have expressed doubt about whether the move will have a meaningful impact on yields.

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