The Consumer Price Index (CPI) increased 0.1% in July from the previous month, following a 0.4% decline in June. Core CPI, which excludes volatile food and energy prices, rose 0.2% month on month.
On an annual basis, headline inflation eased to 3.4% from 3.5% in June, while core inflation was 2.5%.
The data matched forecasts from economists surveyed by Bloomberg and was closely watched by investors for clues about the Federal Reserve’s next move on interest rates.
The moderation in headline inflation could ease concerns about renewed price pressures at a time when geopolitical tensions involving Iran have contributed to volatility in oil prices.
US stock futures rose following the inflation report, while Treasury yields fell across maturities as traders assessed the implications for monetary policy.
The CPI is among the key measures of inflation watched by the Federal Reserve as policymakers assess price pressures and the outlook for interest rates.