US July CPI Rises 0.1% as Annual Inflation Holds at 3.4%, Easing Pressure on Fed to Hike

The Bureau of Labor Statistics reported on August 12 that the Consumer Price Index rose 0.1% in July on a seasonally adjusted basis, a rebound from June's sharp 0.4% decline but still a modest reading that brought the 12-month inflation rate to 3.4%, in line with economist forecasts. Core CPI, which strips out food and energy, held at 0.2% month over month and 2.5% year over year. Energy was the primary drag, falling 1.5% on the month, with gasoline down 2.9% in July, though gasoline remains 24.6% higher than a year ago.

Shelter costs cooled notably, rising just 0.1%. The report removes the immediate threat of a hawkish surprise and, according to Fed watcher Nick Timiraos, reduces pressure on the Federal Reserve to raise rates at its September meeting, with officials having maintained that current policy is already restrictive enough to guide inflation back toward the 2% target. Inflation nonetheless remains well above that goal, keeping the Fed's next move on what analysts described as a knife edge.

Bitcoin held near $64,000 following the release, with crypto markets largely unmoved by the data.