A cooler July inflation reading is likely to take expectations of a September rate hike off the table.
The Consumer Price Index on a core basis, excluding volatile food and energy prices, rose 2.5% last month, in line with expectations and down a tenth of a percentage point from June
Month over month, core CPI rose 0.2%, also in line with expectations. The Federal Reserve analyzes inflation on a core basis to get a more reliable reading on prices because energy and food prices can move around a lot. The new CPI reading marks the second straight month that inflation has cooled.
Core CPI was 2.6% for June, down from 2.9% in May. However, re-escalating tensions in Iran have led to volatile energy prices, which could still have implications for prices on a headline and core basis through the year. The latest inflation prints also come after a weak reading on the job market that showed the economy lost 23,000 jobs in July.