U.S. News: Inflation Rate Picks Up as Food, Energy Costs Rise; Inflation Pace Is Fastest in 17 Years
U.S. inflation accelerated in July, as prices rose 5.6% from a year earlier, the fastest pace in 17 years.</br></br>The consumer-price index rose 0.8% from June, reflecting increased prices for food, energy, airline fares and apparel, the Labor Department said Thursday. That followed a rise of 1.1% the month before. Core inflation, which excludes food and energy, advanced 0.3% for the second consecutive month and was up 2.5% from a year before. That is well above the Fed's "comfort zone" of 1.5% to 2%.</br></br>"A truly ugly inflation report," said Harm Bandholz, economist at UniCredit Markets and Investment Banking, in a note to clients.</br></br>Slower inflation may already be on the way, economists said, because of a combination of factors: the recent drop in prices for oil and other commodities; the strengthening of the dollar, which lowers the price of imports; and continued weakness in the U.S. economy.</br></br>That suggests Federal Reserve policy makers are unlikely to raise interest rates despite their policy statement last week that inflation remains a "significant" concern. The Fed is generally expected to keep official interest rates steady into next year -- though rate increases could end up back on the table later this year if recent core- inflation increases persist.