US headline inflation in July ticked up slightly from June, but by less than expected, boosting the case for the Federal Reserve to hold interest rates steady at its next meeting in September.
The Bureau of Labor Statistics reported that the consumer price index (CPI) rose 0.2% from June to July, giving annual growth of 3.2%, up from the annual rate of 3% in June. The figure was below expectations for annual growth of 3.3%.
Core inflation, which strips out the volatile food and energy components, rose 0.2% in July, the same rate as the previous month, taking the annual rate of growth to 4.7%, down from 4.8% in June, and in line with forecasts.
Paul Ashworth, chief North America economist at Capital Economics, said: "The disinflationary pressures continued to build in July, with both headline and core CPI increasing by a moderate 0.2% m/m."
"Admittedly, the annual headline inflation rate actually ticked up to 3.2%, from 3.0%, while the core rate only edged down to a still high 4.7%, from 4.8%."
"But those rates mostly reflect the still high rates of lagging shelter price inflation. Stripping out shelter as well, core prices fell by 0.1% m/m last month and the annual inflation rate was only 2.5%."
"Overall, there’s nothing here to suggest the Fed needs to push ahead with further interest rate hikes this year," he added.