U.S. consumer prices edged higher in July, the government reported Thursday, but underlying data signaled that inflation is not starting to resurge in the world’s biggest economy.

The Labor Department reported that the consumer price index rose 3.2% on an annualized basis in July, up from 3% in June. On a month-to-month basis, prices were up by two-tenths of a percent in July, the same figure as in June compared to May.

The U.S. central bank, the Federal Reserve, has raised its benchmark interest rate 11 times over the last 17 months, pushing it to a 22-year high to curb inflation, which a year ago topped 9%. Higher interest rates boost borrowing costs for businesses and consumers alike and can cut into spending.

The newest economic report could give Fed policymakers reason to put off another rate increase at its September meeting. The July figures lowered the three-month annualized rate of core inflation, which excludes volatile food and energy prices, to 3.1%, the lowest reading in two years.

Fed officials often focus on the core reading because they consider it a better barometer of future inflation than the overall rate.

Greg McBride, the chief financial analyst of Bankrate.com, said in a statement, “The monthly increase of 0.2% in the consumer price index is right on target and represents the kind of progress needed to get inflation down to a sustainable 2% annual rate.”

But he warned that “further increases in oil prices could throw up a detour on the journey to 2% inflation.”

“Everything we buy in a store or online has to be transported, and even some service categories add fuel surcharges or raise prices in response,” McBride said. “Easing inflation was aided by gasoline prices that had fallen nearly 20% in the 12 months ending July 31. But with a recent surge, gas prices are now closing in on $4 per gallon. Something to watch in the months ahead.”

The state of the U.S. economy is particularly important as the national November 2024 presidential election edges closer. While other issues are important to tens of millions of voters — abortion rights, immigration control, crime, Russia’s war in Ukraine, to name a few — the state of the American economy and the cost of living are often at the forefront of considerations in voters’ minds.

While the 3.5% U.S. unemployment rate remains at near a 50-year low, and hundreds of thousands of jobs have been added to the economy month after month, national polls show that voters do not think that President Joe Biden has managed the economy well.

Opposition Republican presidential contenders have often blamed Biden for too much government spending and the country’s ever-growing long-term debt total, which now is more than $32 trillion.
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