US inflation pressures rise in July; Fed on track to lift rates

WASHINGTON: US consumer prices rose in July and the underlying trend continued to strengthen, pointing to a steady increase in inflation pressures that keeps the Federal Reserve on track to gradually raise interest rates.

The Labor Department said its Consumer Price Index advanced 0.2 percent, the bulk of which was due to a rise in the cost of shelter, driven by higher rents. The CPI rose 0.1 percent in June. In the 12 months through July, the CPI increased 2.9 percent, matching the increase in June. Excluding the volatile food and energy components, the CPI rose 0.2 percent, the same gain as in May and June. The annual increase in the so-called core CPI was 2.4 percent, the largest rise since September 2008, from 2.3 percent in June.

Economists polled by Reuters had forecast both the CPI and core CPI rising 0.2 percent in July.

US Treasury yields held near threeweek lows and US stocks fell on anxiety about Turkey’s financial woes and its deepening rift with the United States. The US dollar was trading higher against a basket of currencies. “As the July CPI figures make clear, underlying price pressures are still mounting,” said Michael Pearce, senior US economist at Capital Economics in New York.

The Fed more closely tracks a different inflation measure, the personal consumption expenditures (PCE) price index excluding food and energy, which increased 1.9 percent in June. —