Annual consumer inflation drops to 2.9% in July; slowest since March 2021

Aug. 14 (UPI) -- U.S. consumer prices rose in line with analysts' expectations in July with year-to-year inflation growing at its slowest rate since March 2021, the Bureau of Labor Statistics reported Wednesday.

The consumer price index increased by a seasonally adjusted 0.2% in July and 2.9% over the past 12 months.

Dow Jones economist predicted that prices rose 0.2% for the month and 3% over the past 12 months.

Core CPI, which excludes volatile food and energy prices, rose 0.2% in July.

The July figures come after consumer prices fell 0.1% in June and also managed to meet Wall Street expectations, which could give the Federal Reserve more ammunition to cut the interest rates next month.

The Labor Department said shelter continued to be the main driver of the consumer price increases. Its 0.4% increase in July accounted for 90% of the monthly price jump.

Energy costs went unchanged in July after falling 0.2% in June, while food away from home increased by 0.2%. Food purchased for the home rose slightly, 0.1%, last month.

"Coming down but the sticky areas continue to be sticky," Liz Ann Sonders, chief investment strategist at Charles Schwab, said of the inflation rate in certain sectors, according to CNBC.

"We have to keep a close eye on both the inflation data as well as the employment data."

The CPI report said that the index without food and energy rose 3.25 over the past 12 months, which also was the smallest increase since April 2021. The energy sector has increased 1.1% over the past 12 months while food jumped 2.2% over the past year.

The producer price index , released on Tuesday, also showed prices rising slower than expected for wholesalers, growing by 0.1% in July and 2.2% over the past 12 months.