U.S. consumer prices increased 0.2% in July on a seasonally adjusted basis, matching economists' expectations, according to the Bureau of Labor Statistics. The annual inflation rate stood at 2.9%, down from 3.0% in June.
The core index, which excludes food and energy, also rose 0.2% for the month, with a year-over-year increase of 3.2%, slightly below the previous month's 3.3%. Shelter costs accounted for nearly 90% of the monthly increase, while energy prices fell 0.5%.
The data supports the Federal Reserve's cautious approach to interest rates. Market expectations for a rate cut in September remain high, with traders pricing in a 75% probability of a 25-basis-point reduction, according to CME FedWatch.
Economists note that while inflation is cooling, it remains above the Fed's 2% target. The report is unlikely to alter the Fed's policy path, as officials have emphasized data dependence.
