Inflation picked up in July, reversing the decline in prices seen in the prior month, but remained cool enough to lock in a rate cut from the Federal Reserve next month.
The consumer price index climbed 2.9 in July from a year earlier, the Bureau of Labor Statistics said Wednesday. In June, the government’s main inflation index was up three percent from a year earlier.
For the month, prices rose 0.2 percent, a reversal from the prior month’s 0.1 percent decline.
Economists had forecast prices to be up three percent for the year and 0.2 percent for the month.
The index for shelter rose 0.4 percent, accounting for nearly 90 percent of the increase. Rents increased by a sharp 0.5 percent for the month, defying predictions that rental inflation would continue to ease. Owners’ equivalent of rent, which is meant to capture changes in the price of homeownership, rose 0.4 percent.
Core inflation, which excludes food and energy, rose 0.2 percent, an acceleration after the previous month’s 0.1 percent rise. For the year, core prices are up 3.2 percent. Both the monthly and annual increases were in line with expectations.
Energy prices were unchanged over the month, ending a two-month long decline. Gasoline prices were flat and electricity prices ticked up 0.1 percent.
Food prices rose 0.2 percent for the second consecutive month. The index for prices of dining out rose 0.2 percent. The index covering groceries rose 0.1 percent.
Core goods prices, a measure which excludes food and energy, fell 0.3 percent for the month and are down 1.9 percent. Prices have now fallen in five of the first seven months of this year.
Services, excluding energy services, rose 0.3 percent, the largest gain since April. Compared with a year ago, core services prices are up 4.9 percent.
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