U.S. consumer price index (CPI) rose 3.2 percent in July from a year ago, slower than expected, according to the Labor Department on Thursday, in a sign of a moderate rise in inflation.
The July annual inflation, following a 3 percent increase in June, rose for the first time in more than a year, but underlying measures remained mild.
On a monthly basis, the CPI increased 0.2 percent over last month, matching the gain in June.
Shelter accounted for more than 90 percent of the monthly increase in the CPI, with rental costs increasing 0.4 percent.
Food prices gained 0.2 percent in the month, and energy increased 0.1 percent, according to official data.
The core CPI, which excludes volatile food and energy prices, grew 0.2 percent in July month on month, matching the rise in June.
In the 12 months through July, the core CPI increased 4.7 percent, the lowest level since October 2021, after rising 4.8 percent in June.
“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.
Inflation has come well down from a peak of 9.1 percent in June 2022, but it is still considerably above the Federal Reserve’s target of 2 percent level.
“While it would be fair to describe prices as still relatively high in places such as shelter and used cars, we are witnessing a rate of change that is encouraging to consumers, as well as to Federal Reserve policymakers,” said Rick Rieder, chief investment officer of global fixed income at asset management firm BlackRock.