US Core Inflation Remains Low, Easing Pressure on Federal Reserve

The Bureau of Labor Statistics released data showing that core inflation in the US was subdued in July, possibly easing pressure on the Federal Reserve to raise interest rates.

According to the report, the consumer price index excluding food and energy categories increased 0.2% from a month earlier, while overall prices rose 0.1%. On an annual basis, core inflation advanced 2.5%, matching the slowest pace since March 2021.

Oscar Munoz, head of US economics at TD Securities, said that 'it's good news for those Fed officials who want to be patient here.' The report suggests that the impact of the energy-price shock from the Iran war continued to fade in July. Energy and gasoline prices fell for a second month.

The figures may give the Fed more room to weigh inflation pressures against a recent slowdown in hiring as it debates whether to lift borrowing costs at its September 15-16 meeting.