U.S. Consumer Prices Inch Up In Line With Estimates In July, Annual Growth Edges Lower

(RTTNews) - Consumer prices in the U.S. crept slightly higher in the month of July, according to a closely watched report released by the Labor Department on Wednesday.

The report said consumer prices inched up by 0.1 percent in July after falling by 0.4 percent in June. The uptick in consumer prices matched economist estimates.

The annual rate of growth by consumer prices edged down to 3.4 percent in July from 3.5 percent in June, which also matched expectations.

The Labor Department said shelter prices crept up by 0.1 percent in July, accounting for roughly two-thirds of the monthly increase.

Meanwhile, the report showed an extended pullback in energy prices, which tumbled by 1.5 percent in July after plunging by 5.7 percent in June.

Excluding the slump in energy prices and an uptick in food prices, core consumer prices rose by 0.2 percent in July after coming in unchanged in June. The increase in core prices also matched expectations.

The annual rate of growth by core consumer prices slipped to 2.5 percent in July from 2.6 percent in June. The slight slowdown also came in line with estimates.

The modest monthly increase in core consumer prices reflected higher prices for shelter, medical care, airline fares, communication, education, and recreation, while prices for motor vehicle insurance decreased.

"This is the type of inflation report the market was hoping for," said Nationwide Financial Market Economist Oren Klachkin. "It keeps the disinflation trend intact and so should lower the volume of the alarm bells at the Fed and allow policymakers to keep interest rates steady in September - contingent on the August CPI and employment reports."

"Barring the realization of upside risks, we see inflation trending lower into 2027 as the energy shock and most other boosts drop out of the calculation," he added. "But it's going to be somewhat of a grind and we don't see the Fed hitting its inflation target until spring 2027 at the earliest."

On Thursday, the Labor Department is scheduled to release a separate report on consumer price inflation in the month of July.

Producer prices are currently expected to rise by 0.2 percent in July after falling by 0.3 percent in June, while the annual rate of producer price growth is expected to slow to 4.9 percent in July from 5.5 percent in June.