US inflation rises moderately in July

The US consumer price index rose 0.2% in July compared to 0.3% gain in June, while annualized inflation was unchanged at 2.7% in twelve months to July.

So called core inflation, excluding the most volatile food and energy components, was up by 0.3% in July, after rising by 0.2% previous month.
Annualized core CPI advanced 3.1% in July after rising 2.9% in June, that marks the largest gain in six months, driven mainly by rising costs for goods because of import tariffs.

Prior to today’s release of July inflation report, The Federal Reserve was widely expected to resume cutting its interest rates in September, after the central bank left its benchmark rate unchanged in the last policy meeting at 4.25%-4.50% range for the fifth straight time since December.

Increased bets for fresh rate cut were primarily driven by weak July’s employment report and sharp downward revisions to the nonfarm payrolls figures for May and June.

The latest data showed stronger than expected rise in closely monitored core inflation, that may raise fresh questions for the US policymakers, however, the report was overshadowed by growing concerns over the quality of reports following cuts in budget and staffing that have led to the suspension of data collection for portions of the CPI basket in some areas across the United States.