The US seasonally adjusted consumer price index, a measure of inflation, rose by 0.1% in July, as expected and following a 0.4% decrease in June, according to data released Tuesday by the Bureau of Labor Statistics.
Core CPI, which excludes food and energy prices, rose by 0.2%, as per the consensus estimate, after holding steady in June.
Food prices increased by 0.1%, while energy prices were down 1.5%. Gasoline prices were down 2.9%.
Owners' equivalent rents increased by 0.3%, while regular rents also rose by 0.3%. There were also notable gains in airline fares, which increased by 2.2%, and medical care services, which increased by 0.6%.
CPI excluding food, energy and shelter rose by 0.3% after a 0.1% decline in the previous month.
The year-over-year rates for overall CPI decreased to 3.4% from 3.5% in the previous month and that for core CPI fell to 2.5% from 2.6% in the previous month.
The monthly consumer price index, or CPI, reported by the Bureau of Labor Statistics, measures the index level of prices paid by consumers for a basket of goods and services such as food, energy, vehicle, medical care, apparel, and housing.
The core measure, which excludes food and energy due to their volatility, is closely watched by markets and the Federal Reserve as a sign of underlying inflation pressures.
Rising inflation is a sign of strong US consumer demand, but both stocks and bond normally react negatively to level of price growth that would necessitate higher interest rates.