Inflation rose in July, reversing a decline in prices the previous month, but remained muted enough to ensure the Federal Reserve cuts interest rates next month.
The Bureau of Labor Statistics said Wednesday that the consumer price index rose 2.9% in July from a year earlier. The government’s main inflation measure rose 3% from a year earlier in June.
Prices rose 0.2% this month, reversing a 0.1% decline in the previous month.
Economists had expected prices to rise 3% for the year and 0.2% for the month.
The housing index rose 0.4%, accounting for about 90% of the increase. Rents jumped 0.5% for the month, defying expectations that rental inflation would continue to ease. The owner-occupied rent equivalent, which reflects changes in homeownership prices, rose 0.4%.
Core inflation, which excludes food and energy prices, rose 0.2%, accelerating from a 0.1% increase in the previous month. On an annual basis, core prices rose 3.2%. Both the monthly and annual increases were in line with expectations.
Energy prices remained unchanged for the month, ending two months of declines, while gasoline prices were stable and electricity prices rose 0.1%.
Food prices rose 0.2% for the second consecutive month. The Dining Out Price Index rose 0.2%. The Grocery Price Index rose 0.1%.
Core commodity prices, excluding food and energy, fell 0.3% from the previous month to end the 1.9% decline, marking the first time prices have fallen in five of the first seven months of the year.
Excluding energy services, prices rose 0.3%, the biggest increase since April. Year-over-year, core services prices rose 4.9%.
