The US consumer price index rose 0.5% last month against June’s CPI reading of a 0.9% gain, suggesting a slight cooling of the US economy’s COVID recovery.
In the 12 months through July, the CPI was up 5.4%.
Oil futures sank by 1% to $67.55 a barrel following the data release, but climbed by midday to test $69. Gold rose steadily following the data release to reach $1,753 by noon.
The US dollar dropped sharply against the Euro and the Pound.
Core CPI – which excludes volatile food and energy components – accelerated 0.3% after ticking up 0.9% in June. On a year-to-year basis core CPI has surged 4.3%.
Close to consensus
The data fell close to the consensus view. Economists were expecting CPI to edge lower, to 5.3% on a yearly basis, following a 13-year high of 5.4% announced in June. Core CPI had been forecast to retreat to 4.3% from 4.5%.
CPI is the most widely used measure of inflation and viewed as a key indicator for economic policymakers such as the US Federal Reserve.
Although the latest inflation reading showed a slackening in pace, it is still faster than normal. Used cars and truck prices have been the main driver of inflation in recent months as a global chip shortage has hit new motor vehicle production, prompting buyers to tap the used market.
The CPI and other price measures have been rising this year due to a comeback in consumer spending and US output.