The U.S. Consumer Price Index (CPI) rose 0.1% in July on a monthly basis, the Bureau of Labor Statistics (BLS) reported this Wednesday (12). The result, in line with expectations, slowed the annual inflation rate from 3.5% to 3.4%. The core index, which excludes food and energy, rose 0.2% on the month and 2.5% over 12 months.
The reading marks the second consecutive month of cooling after the 4.2% peak in May, when an energy shock pushed prices higher. In June, the annual index had already fallen to 3.5%.
Housing remains the main pressure factor. Housing costs rose 0.1% in July and accounted for about two-thirds of the monthly CPI gain. Rent and owners' equivalent rent each rose 0.3%. Food rose 0.1%, with meals away from home up 0.3% and food at home down 0.1%.
Energy remains a risk
Energy fell 1.5% in July, dragged down by gasoline, which dropped 2.9%. Despite the monthly relief, energy prices are still 14.7% above a year earlier, and gasoline prices are up 24.6%. Brent crude was trading at US$91 a barrel, and WTI at US$83.
Core inflation, in turn, recorded one of the lowest annual readings since early 2021. Services such as medical care (0.4%), airline fares (2.2%), and used vehicles (0.4%) rose in July.
Fed buys time but does not declare victory
The data reduces immediate pressure on the Federal Reserve to raise interest rates. The central bank kept the rate in the 3.50% to 3.75% range at the end of July, with three governors voting for an increase. Officials have said that several months of cooler readings will be needed to confirm convergence to the 2% target.
Bitcoin shows little reaction
Bitcoin passed through the report without major swings. The cryptocurrency was down about 0.4% in the hour following the release, trading between US$63,800 and US$64,300. The asset remains in the US$60,000 range, without repeating the volatility of earlier periods.
The next test will be on September 11, when the BLS releases the August CPI. Investors and Fed officials will assess whether July's cooling is durable, especially in energy, housing, and services.
