US Inflation Eases to 3.4% as July Consumer Prices Rise 0.1%

WASHINGTON — Fresh US economic data released on Wednesday has added another significant development to the evening agenda.

The US Consumer Price Index rose 0.1% in July, while annual inflation slowed slightly to 3.4% from 3.5% in June. Core inflation, excluding volatile food and energy prices, increased 0.2% during the month and stood at 2.5% year-on-year.

The numbers were broadly in line with market expectations and reduced immediate pressure on the Federal Reserve to increase interest rates at its September meeting.

Wall Street reacted positively, with technology shares helping lift major US indices.

However, policymakers still face considerable uncertainty. Energy prices have risen substantially because of the Middle East crisis, meaning some inflationary effects may take time to appear in official data.

Markets therefore increasingly expect the Federal Reserve to hold rates unchanged in September, although investors have not completely ruled out another increase later in the year.

Market prices and indicators may change after publication.