Core inflation also dipped in July to 3.2 percent.
The U.S. annual inflation rate slowed for the fourth consecutive month in July and came in below market forecasts, raising the odds of the Federal Reserve cutting interest rates in September.
The consumer price index (CPI) eased to 2.9 percent last month, from 3 percent in June, according to the Bureau of Labor Statistics (BLS). The consensus estimate was 3 percent.
On a monthly basis, the CPI rose 0.2 percent, up from the 0.1 percent decline in the previous month. This was in line with market expectations.
Core inflation, which omits the volatile food and energy categories, also slipped to 3.2 percent last month, from 3.3 percent. The reading matched market estimates.
The core CPI jumped 0.2 percent month-over-month, up from 0.1 percent and mirroring economists’ estimates.
Shelter was the primary driver of inflation last month as it has remained stubbornly high, despite expectations that this part of the CPI data would ease by now.
The shelter index increased 0.4 percent from June to July and was up 5.1 percent from a year ago.
U.S. home prices have been touching record levels based on the National Association of Realtors (NAR) and S&P CoreLogic Case-Shiller numbers. Last month, Redfin reported that rents decreased in July for the first time since June 2020, with the national median asking rent slipping to $1,647.
The energy index was flat and is up 1.1 percent in the 12 months ending in July. This included gasoline rising 0.1 percent, electricity edging up 0.1 percent, and utility-piped gas services tumbling 0.7 percent.
Energy prices have been a mixed bag this summer. Crude oil and gasoline costs had been subdued in July, but they have witnessed a resurgence in August, driven primarily by geopolitical tensions and tightness in the international market.
Still, year-to-date, the U.S. oil benchmark is up 10 percent to nearly $79 a barrel. The national average price for a gallon of gasoline is also up about 10 percent to $3.41.
Motor vehicle insurance, which has rocketed in 2024, was another contributor to inflation last month, surging 1.2 percent monthly. On a 12-month basis, this CPI component has surged 18.6 percent.
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By Andrew Moran
