Consumer prices stateside rose slightly in July as gasoline and food prices increased marginally, but a solid gain in shelter costs suggested inflation pressures were stabilizing enough to support expectations of an interest rate hike this year.
The U.S. Labor Department said on Wednesday its Consumer Price Index edged up 0.1% last month after advancing 0.3% in June, marking the sixth straight month of increases.
In the 12 months through July, the CPI climbed 0.2%. It was the second month the annual CPI increased after plunging crude oil prices pushed it into negative terrain in January.
Signs of an ebb in the disinflationary trend, combined with a tightening labour market and strengthening housing sector could give the Federal Reserve confidence that inflation will eventually rise toward its 2% target.
The U.S. central is expected to raise its short-term interest rate next month. But given that inflation will likely remain tame because of a strong dollar, renewed weakness in oil and commodity prices, as well as China's devaluation of the yuan, the pace of monetary policy tightening is likely to be gradual.
Economists polled by Reuters had forecast the CPI rising 0.2%from June and gaining 0.2% from a year ago.
The so-called core CPI, which strips out food and energy costs, ticked up 0.1% last month after rising 0.2% in June. Shelter, which recorded its biggest increase in nearly eight and a half years, was the main contributor to last month's rise in the core CPI.
