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July CPI rises 0.1% month over month, matching forecasts; annual inflation reaches 3.4%

2026-08-13·newswire-us-stock-020002
July CPI rises 0.1% month over month, matching forecasts; annual inflation reaches 3.4%.

A major inflation report released Wednesday showed that price increases for goods and services slowed, potentially reducing the urgency for the Federal Reserve to raise interest rates immediately. The U.S.

Bureau of Labor Statistics said the seasonally adjusted Consumer Price Index, a key inflation gauge for the Federal Reserve, rose 0.1% in July from the previous month. Core CPI, which excludes volatile food and energy prices, increased 0.2% month over month. Overall CPI inflation was 3.4% from a year earlier, while core CPI inflation was 2.5%.

All of the figures matched surveyed economists’ consensus estimates. Although inflation remains significantly above the Federal Reserve’s 2% target, monthly inflation readings were moderate in both June and July. That suggests the inflation surge driven by energy prices in the first half of the year is cooling.

Prices remain volatile, however, and changes in the Middle East will continue to create uncertainty. After the data were released, U.S. stock-index futures rose and Treasury yields fell across the curve. Based on CME’s FedWatch interest-rate futures gauge, traders further reduced the probability of a September rate hike to 42%.

Energy prices fell 1.5% month over month in July after dropping 5.7% in June. Even so, energy prices were still up 14.7% from a year earlier after their sharp increases in previous months. Energy prices had surged 10.9% at one point after Iran was attacked in March. Food and shelter costs each rose 0.1% in July from the previous month.

Shelter costs have been particularly persistent and are a major reason inflation has remained above the Federal Reserve’s 2% target. The Bureau of Labor Statistics said shelter accounted for about two-thirds of the overall CPI increase, even though the category’s gain was modest this month.

New-vehicle prices rose 0.1% month over month, while prices for used cars and trucks increased 0.4%. Medical-care prices rose 0.4%, and airfares accelerated 2.2% from the previous month. The Federal Open Market Committee, the Federal Reserve body responsible for setting interest rates, will hold its next policy meeting in September.

Officials will have one more month of inflation data before making their rate decision. Allen Zentner, a chief economic strategist in wealth management, said: “The inflation data matched expectations, extending the prevailing view formed after last week’s employment report that there is no need to raise rates.

Another inflation report will be released before the September FOMC meeting, so the situation remains subject to change. But unless subsequent data shift significantly, the Federal Reserve will most likely leave rates unchanged next month.” About a week earlier, markets had viewed a September rate hike as highly likely.

But after July’s nonfarm payrolls showed a net decline in jobs, concerns about a weakening labor market grew. Combined with volatility in energy prices, that changed market expectations and reduced pressure on the Federal Reserve to raise rates urgently. At its July policy meeting, the FOMC voted 9-3 to keep the benchmark interest rate unchanged.

All three dissenting officials favored a rate hike. Markets currently expect a rate increase to be more likely in October or December. The article also included a photo captioned Aug. 8, 2026, showing a consumer selecting fresh fruit at a supermarket in Wilmington, North Carolina.

It said global food prices climbed to a more than three-year high in July because of severe weather in major food-producing regions and renewed concerns that key grain-export routes could be disrupted.

#Stocks #Fed #Bonds

Full text

July CPI rises 0.1% month over month, matching forecasts; annual inflation reaches 3.4%

A major inflation report released Wednesday showed that price increases for goods and services slowed, potentially reducing the urgency for the Federal Reserve to raise interest rates immediately. The U.S. Bureau of Labor Statistics said the seasonally adjusted Consumer Price Index, a key inflation gauge for the Federal Reserve, rose 0.1% in July from the previous month. Core CPI, which excludes volatile food and energy prices, increased 0.2% month over month. Overall CPI inflation was 3.4% from a year earlier, while core CPI inflation was 2.5%. All of the figures matched surveyed economists’ consensus estimates. Although inflation remains significantly above the Federal Reserve’s 2% target, monthly inflation readings were moderate in both June and July. That suggests the inflation surge driven by energy prices in the first half of the year is cooling. Prices remain volatile, however, and changes in the Middle East will continue to create uncertainty. After the data were released, U.S. stock-index futures rose and Treasury yields fell across the curve. Based on CME’s FedWatch interest-rate futures gauge, traders further reduced the probability of a September rate hike to 42%. Energy prices fell 1.5% month over month in July after dropping 5.7% in June. Even so, energy prices were still up 14.7% from a year earlier after their sharp increases in previous months. Energy prices had surged 10.9% at one point after Iran was attacked in March. Food and shelter costs each rose 0.1% in July from the previous month. Shelter costs have been particularly persistent and are a major reason inflation has remained above the Federal Reserve’s 2% target. The Bureau of Labor Statistics said shelter accounted for about two-thirds of the overall CPI increase, even though the category’s gain was modest this month. New-vehicle prices rose 0.1% month over month, while prices for used cars and trucks increased 0.4%. Medical-care prices rose 0.4%, and airfares accelerated 2.2% from the previous month. The Federal Open Market Committee, the Federal Reserve body responsible for setting interest rates, will hold its next policy meeting in September. Officials will have one more month of inflation data before making their rate decision. Allen Zentner, a chief economic strategist in wealth management, said: “The inflation data matched expectations, extending the prevailing view formed after last week’s employment report that there is no need to raise rates. Another inflation report will be released before the September FOMC meeting, so the situation remains subject to change. But unless subsequent data shift significantly, the Federal Reserve will most likely leave rates unchanged next month.” About a week earlier, markets had viewed a September rate hike as highly likely. But after July’s nonfarm payrolls showed a net decline in jobs, concerns about a weakening labor market grew. Combined with volatility in energy prices, that changed market expectations and reduced pressure on the Federal Reserve to raise rates urgently. At its July policy meeting, the FOMC voted 9-3 to keep the benchmark interest rate unchanged. All three dissenting officials favored a rate hike. Markets currently expect a rate increase to be more likely in October or December. The article also included a photo captioned Aug. 8, 2026, showing a consumer selecting fresh fruit at a supermarket in Wilmington, North Carolina. It said global food prices climbed to a more than three-year high in July because of severe weather in major food-producing regions and renewed concerns that key grain-export routes could be disrupted.

A major inflation report released Wednesday showed that price increases for goods and services slowed, potentially reducing the urgency for the Federal Reserve to raise interest rates immediately.

The U.S. Bureau of Labor Statistics said the seasonally adjusted Consumer Price Index, a key inflation gauge for the Federal Reserve, rose 0.1% in July from the previous month. Core CPI, which excludes volatile food and energy prices, increased 0.2% month over month. Overall CPI inflation was 3.4% from a year earlier, while core CPI inflation was 2.5%. All of the figures matched surveyed economists’ consensus estimates.

Although inflation remains significantly above the Federal Reserve’s 2% target, monthly inflation readings were moderate in both June and July. That suggests the inflation surge driven by energy prices in the first half of the year is cooling. Prices remain volatile, however, and changes in the Middle East will continue to create uncertainty.

After the data were released, U.S. stock-index futures rose and Treasury yields fell across the curve. Based on CME’s FedWatch interest-rate futures gauge, traders further reduced the probability of a September rate hike to 42%.

Energy prices fell 1.5% month over month in July after dropping 5.7% in June. Even so, energy prices were still up 14.7% from a year earlier after their sharp increases in previous months. Energy prices had surged 10.9% at one point after Iran was attacked in March.

Food and shelter costs each rose 0.1% in July from the previous month. Shelter costs have been particularly persistent and are a major reason inflation has remained above the Federal Reserve’s 2% target. The Bureau of Labor Statistics said shelter accounted for about two-thirds of the overall CPI increase, even though the category’s gain was modest this month.

New-vehicle prices rose 0.1% month over month, while prices for used cars and trucks increased 0.4%. Medical-care prices rose 0.4%, and airfares accelerated 2.2% from the previous month.

The Federal Open Market Committee, the Federal Reserve body responsible for setting interest rates, will hold its next policy meeting in September. Officials will have one more month of inflation data before making their rate decision.

Allen Zentner, a chief economic strategist in wealth management, said: “The inflation data matched expectations, extending the prevailing view formed after last week’s employment report that there is no need to raise rates. Another inflation report will be released before the September FOMC meeting, so the situation remains subject to change. But unless subsequent data shift significantly, the Federal Reserve will most likely leave rates unchanged next month.”

About a week earlier, markets had viewed a September rate hike as highly likely. But after July’s nonfarm payrolls showed a net decline in jobs, concerns about a weakening labor market grew. Combined with volatility in energy prices, that changed market expectations and reduced pressure on the Federal Reserve to raise rates urgently.

At its July policy meeting, the FOMC voted 9-3 to keep the benchmark interest rate unchanged. All three dissenting officials favored a rate hike. Markets currently expect a rate increase to be more likely in October or December.

The article also included a photo captioned Aug. 8, 2026, showing a consumer selecting fresh fruit at a supermarket in Wilmington, North Carolina. It said global food prices climbed to a more than three-year high in July because of severe weather in major food-producing regions and renewed concerns that key grain-export routes could be disrupted.

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