Washington: US consumer prices increases slowed in July even as they remained at a 13-year high on a yearly basis and there were tentative signs inflation has peaked as supply-chain disruptions caused by the pandemic work their way through the economy.
The data could provide some support to Fed officials who have repeatedly said that the current burst in inflation is temporary and likely to fade as the handful of categories that have caused inflation to surge in recent months get back on an even keel.
The consumer price index increased 0.5 per cent last month after climbing 0.9 per cent in June, the Labor Department said on Wednesday.
In the 12 months through July, the CPI advanced 5.4 per cent. The drop in the month-to-month inflation rate was the largest in 15 months.
Price gains for used cars and trucks, which have accounted for an outsized chunk of the inflation boost in recent months, rose 0.2%, a sharp drop from the 10.5 per cent increase the prior month.
Prices for airline fares also edged down 0.1 per cent.
Excluding the volatile food and energy components, the CPI rose 0.3 per cent after increasing 0.9 per cent in June. That was the smallest gain in four months and the first deceleration in the so-called core CPI since February.
The core CPI rose 4.3 per cent on a year-on-year basis after advancing 4.5 per cent in June. Annual inflation rates have been lifted by the fading out of last spring's weak readings from the CPI calculation but those so-called base effects are leveling off.
Economists polled by Reuters had forecast the overall CPI would rise 0.5 per cent and the core CPI would rise 0.4 per cent. US Treasury prices slipped following the release of the data.
"It fits the Fed's narrative and they can pretty much stand pat on their current strategy," said Jack Ablin, chief investment officer at Cresset Capital Management in Chicago.
Inflation "seems to have crested" and should drop back in coming months, Richmond Fed President Thomas Barkin told Reuters in an interview on Wednesday.
Even if inflation has peaked, it is expected to remain elevated through part of 2022. There were also possible hints that the rise in price pressures may not fall back rapidly as other sectors saw price gains holding or accelerating.