The consumer price index increased 0.2% in July, which put the 12-month inflation rate at 2.9%, the lowest since March 2021, the U.S. Bureau of Labor Statistics reported.
CNBC reported that economists had been looking for the index to rise 0.2% and a 12-month inflation rate of 3%.
Core CPI, excluding food and energy, showed a 0.2% monthly rise and a 3.2% annual rate, which met expectations. The bureau said the core rate is the lowest since April 2021.
The July report is positive news for the prospect of an interest rate cut at the Federal Reserve’s next meeting, Sept. 17-18.
“Today’s CPI print removes any lingering inflation obstacles that may have been preventing the Fed from starting the rate-cutting cycle in September,” Seema Shah, chief global strategist at Principal Asset Management, told CNBC. “Yet the number also suggests limited urgency for a 50 basis point cut.”
The bureau reported that the index for shelter rose 0.4% in July, accounting for nearly 90% of the monthly increase in the all-items index. The energy index was unchanged from June to July after declining in the two previous months. The index for food increased 0.2%.
The New York Times reported that the cooling of the CPI was evidence that inflation is moderating and the Fed is on track to cut interest rates next month. Fed officials have been holding borrowing costs at 5.3%, the highest level in more than two decades, to slow demand and get prices under control.
