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Inflation rate holds steady

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Inflation rate holds steady

July’ annual U.S. inflation rate was 2.7%, lower than expected and unchanged from June despite ongoing worries over effects of import tariffs. Combined with recent Labor Department numbers showing slowed job growth, some analysts said the latest numbers could clear the way for at least one Federal Reserve interest rate cut before year’s end.

“The large downward revisions included in the July employment report heightened concerns around the labor market, and another weak report in August could tip the odds in favor of a September rate cut,” Michael Pearce, deputy chief U.S. economist at Oxford Economics, said in a statement Tuesday.

Still, the Fed has said it wants to reach its target of 2% inflation before cutting rates, and Pearce said there are “clear signs” that prices for some goods are moving higher because of tariffs, though effects are not yet being seen for categories such as new cars and major appliances.

The Labor Department’s latest consumer price index report released Tuesday showed inflation for shelter costs such as rents moderating but still weighing heavily on overall inflation, with prices in that category up 3.7% on an annual basis.

Other prominent contributors to July inflation included used cars and trucks, rising 4.8% from a year earlier, with medical services up 4.3% and transportation services up 3.5%. Annual food price growth slowed but still reached 2.9%, while energy costs declined 1.6%, due largely to a 9.5% drop for gasoline.

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