Core US inflation rose less than expected in July, but the year-over-year pace remained elevated, according to a government report today that the inflation-wary Federal Reserve will examine.
Core consumer prices rose a less-than-expected 0.1% in July, but the year-on-year rate of non-food, non-energy inflation remained at 2.4%, the highest since September 2002, a Commerce Department report showed.
Analysts were expecting a 0.2% gain in core consumer prices, an indicator that will be a factor in the Fed's decision whether to hold interest rates steady.
The Fed, which halted a more than two-year string of interest rate increases at its August meeting, was worried at the time about signs of inflation, but patient to gather more data before deciding on any further rate rises, minutes of the meeting indicated. The central bank's policy-setting body next meets September 20.
Personal income rose 0.5% in July, with real disposable income climbing 0.3%, the government said in the same report.
Overall inflation, as measured by a price index for consumer spending, increased by 0.3% last month, reflecting higher energy prices, and followed a revised 0.1% rise in June.
Inflation-adjusted spending rose by 0.5%, the biggest gain since a matching 0.5% advance in December, on a jump in durable goods purchases. Wage and salary income rose 0.6% in July.
The personal saving rate dipped to a negative 0.9%, the 16th month in a row the rate had been negative.
In other news today a report showed that business activity in the US Midwest expanded in August broadly in line with expectations.
The National Association of Purchasing Management-Chicago business barometer slipped to 57.1 in August from 57.9 in July and compared with economists' median forecast for a 57.0 reading in August.
A reading above 50 indicates expansion.
The employment component of the index rose to 55.1 in August from 50.5 in July. Prices paid slipped to 75.2 in August from 86.8 in July. New orders edged down to 59.6 in August from 60.0 in July.
