Consumer prices grew last month at their slowest pace since February, as lower energy costs offset higher price tags for food and shelter, the Labor Department said Tuesday.
The Consumer Price Index, a closely watched measure of inflation, rose a seasonally adjusted 0.1% in July compared with 0.3% the previous month.
The figures were in line with economists' expectations and, at least for now, should ease worries that accelerating inflation could cause problems for the economic recovery.
The Consumer Price Index rose 2% during the 12 months ended in July. That's the Federal Reserve's annual inflation target level. The yearly figure was down from 2.1% in June.
The central bank uses a different government measure based on personal consumption expenditures that has been running lower, although both have been increasing after several years of low inflation.
Concerns about rising inflation could lead the Fed to start raising rock-bottom interest rates sooner.
But with both inflation measures at or below the central bank's annual target level, Fed policymakers are unlikely to signal any major shift from plans to hold off raising rates until next year.
So-called core prices, which exclude volatile food and energy costs, rose 0.1% in July and 1.9% over the previous 12 months, the Labor Department said.
Both figures were unchanged from June.
Energy prices dropped 0.3% in July after a 1.6% rise the previous month. The decline was led by a 0.7% decline in fuel oil prices.
Gas prices were down 0.3% in July, the first drop in four months. Gas prices had jumped 3.3% in June.
Food prices increased 0.4% last month after just a 0.1% rise in June.
Prices for shelter, which includes rent and lodging, rose 0.3% in July, up from a 0.2% increase the previous month.
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