The Federal Reserve’s preferred inflation gauge essentially held steady last month, the Associated Press reports, but a measure of underlying inflation climbed.
The news follows the implementation of President Donald Trump’s broad-based tariffs, which are predicted to drive up prices for consumers and businesses.
The Commerce Department said Friday that prices rose 2.6% in July compared with one year ago — the same annual increase as in June. Excluding volatile food and energy categories, however, so-called “core” prices were up 2.9% from a year earlier. That’s more than June’s 2.8% and the highest number since February.
The figures illustrate why many Fed officials have been reluctant to cut their key interest rate, because while inflation is much lower than the roughly 7% peak it reached three years ago, it remains substantially above the central bank’s 2% target.
