US Inflation Rises Modestly, Easing Rate Hike Bets

The US Consumer Price Index (CPI) rose modestly in July, matching economists' expectations and potentially easing pressure on the Federal Reserve to raise interest rates next month.

The CPI increased 0.1% in July from the previous month, while core CPI, which strips out volatile food and energy prices, rose 0.2%. Both readings matched estimates.

The annual headline CPI increased 3.4%, while core inflation rose 2.5%. These figures were also in line with forecasts, although both measures remained well above the Federal Reserve's 2% inflation target.

The energy index fell 1.5% in July after declining 5.7% in June, primarily due to a decrease in gasoline prices. The gasoline index fell 2.9% during the month, and before seasonal adjustment, gasoline prices declined 2.1%. Despite recent monthly declines, energy prices remained substantially higher than a year earlier.

Data from the US Energy Information Administration showed that average gasoline prices fell to $4.064 a gallon in July from $4.184 in June. Prices had averaged $4.609 a gallon in May.