SummaryConsumer price index increases 0.2% in JulyCPI rises 3.2% year-on-year due to base effectsCore CPI gains 0.2%; climbs 4.7% year-on-yearWeekly jobless claims increase 21,000 to 248,000WASHINGTON, Aug 10 (Reuters) – U.S. consumer prices increased moderately in July as higher rents were mostly offset by declining costs of goods such as motor vehicles and furniture, a trend that could persuade the Federal Reserve to leave interest rates unchanged next month.The report from the Labor Department on Thursday also showed underlying inflation pressures subsided further last month. The annual increase in prices excluding the volatile food and energy components, the so-called core inflation, was the smallest in nearly two years.Moderate inflation, together with a cooling labor market, bolstered economists’ conviction that the U.S. central bank will be able to engineer a “soft landing” for the economy, after a year of hand-wringing about a recession.”Significant progress on the inflation front has been made, a persistent trend of disinflation is evident,” said Sung Won Sohn, a finance and economics professor at Loyola Marymount University in Los Angeles. ”It is time for the central bank to stop its campaign to beat inflation, it should wait and see for a while.”The consumer price index rose 0.2% last month, matching the gain in June. Shelter accounted for more than 90% of the increase in the CPI, with rental costs increasing 0.4%.Food prices gained 0.2%. Grocery food prices increased 0.3% after being unchanged in June. They were boosted by higher prices for eggs, beef, dairy as well as fruit and vegetables. Still, grocery store prices have slowed considerably, increasing 3.6% on a year-on-year basis in July after peaking at 13.5% in August 2022.Restaurant meal prices rose 0.2%, slowing back to pre-pandemic trends. The cost of energy products edged up 0.1%, with gasoline prices rising slightly. A jump in prices at the pump in late July will likely be reflected in the August inflation report.The CPI advanced 3.2% in the 12 months through July. That followed a 3.0% rise in June, which was the smallest year-on-year gain since March 2021.The increase in the annual CPI rate picked up for the first time in 13 months as it was calculated from a lower base after prices subsided last July following a jump that had boosted inflation to a pace not seen in more than 40 years.Annual consumer prices have come down from a peak of 9.1% in June 2022. The CPI increased at a 1.9% annualized rate over the last three months, the slowest pace since June 2020, from 2.7% in June. The Fed has a 2% inflation target.Economists polled by Reuters had forecast the CPI would rise 0.2% last month and by 3.3% on a year-on-year basis.”Consumers are seeing broad-based relief on prices as the economy operates in lower gear and a small margin of slack opens in the labor market,” said Bill Adams, chief economist at Comerica Bank in Dallas.Reuters GraphicsThe CPI report is one of two…
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