Investing.com -- Annual U.S. inflation accelerated by less than expected in July and rose at roughly the same pace on a monthly basis, pointing to a possible easing in price pressures and potentially bolstering the case for the Federal Reserve to pull back from its long-standing cycle of interest rate increases.
The headline consumer price index (CPI) held steady at 0.2% month-on-month, meeting estimates. Yearly, the reading increased by 3.2%, quickening from 3.0% in June. Economists had expected the figure to jump by 3.3%.
Meanwhile, core CPI, which strips out volatile items like food and energy, was also unchanged at 0.2% monthly. Year-on-year, the core figure rose by 4.7%, a slower rate than the projected uptick of 4.8%.
Along with loosening a tight labor market, cooling red-hot inflation has been the main objective of Fed policy during its more than a year-long campaign of interest rate hikes. After peaking at 9.1% last summer, headline inflation has steadily decelerated closer to the central bank's 2% target, although the core number has been stubbornly elevated.
At its most recent gathering, the Fed chose to raise borrowing costs by 25 basis points and noted that its future policy decisions would be "data-dependent."