Moderate Consumer Price Rise Puts Brakes on Inflation

The U.S. Labor Department reported that consumer prices rose moderately in July only a day after producer prices were reported as much higher than expected.

The Consumer Price Index (CPI) increased 0.1 percent in July, in line with the expectations of economists and analysts. The core Consumer Price Index, which excludes food and energy prices, increased 0.2 percent, the exact number economists had hoped for.

For the past twelve months, the CPI is up 2.4 percent and the core CPI is up 2.2 percent. Although inflation at the consumer level has been moderating, the Federal Reserve generally hopes to keep inflation under 2.2 percent on a year-over-year basis.

Wall Street investors have hoped that the Fed will be satisfied that inflation is easing and be compelled to drop interest rates to stimulate economic growth. Some analysts are predicting that credit worries in the mortgage market in particular could prompt the Fed to lower rates as early as next month.