The so-called core consumer price index, a measure which excludes food and energy costs and is preferred by economists to assess underlying inflation, inched upwards by 0.1% in its smallest gain for nearly three years.
Air travel and hotel costs fell from last month, with the price of new and used vehicles also declining since May.
The data underscores traders’ sentiment that economic indicators are progressing well enough for the Federal Reserve to lower its key rate in September. In prepared comments to a congressional hearing this week, Fed chair Jerome Powell indicated the labor market also appeared to be balancing after a surprisingly robust opening to the year.
Surging inflation in 2022 saw the Fed embark on an aggressive rate-hiking path in an effort to tamp down that rampant price growth. After spiking to its highest level in decades in the middle of that year, at 9.1%, inflation has since fallen steadily – although not enough for the Fed to consider lowering rates from their current 23-year high.
The Fed’s latest so-called “dot plot,” a collection of projections on the economic outlook, indicated that the central bank is likely to lower rates at least once during the remainder of this year.
