U.S. consumer prices increased marginally in July, though rising costs for services such as airline fares and some tariff-sensitive goods like household furniture caused a measure of underlying inflation to post its largest gain in six months.
The mixed report from the Labor Department's Bureau of Labor Statistics (BLS) on Tuesday also suggested the disinflationary trend in services was stalling, with a record surge in the cost of dental services and strong increase in healthcare prices. While the pass-through from President Donald Trump's sweeping import duties to goods prices has so far been limited, economists continued to believe higher inflation was around the corner.
Given that the Federal Reserve places more emphasis on services inflation, some observers cautioned that an interest rate cut at the U.S. central bank's September 16-17 policy meeting was not a done deal despite signs of deteriorating labor market conditions. Much will depend on the employment and inflation reports for August.
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