A key U.S. inflation measure used by the Federal Reserve to set interest rates rose in July, due largely to another jump in the cost of services, according to government data published Thursday.
The figure maintains the pressure on the U.S. central bank as it looks to bring inflation firmly back down to its long-term target of 2% through a series of interest rate hikes.
Analysts and traders largely expect the Fed to hold its benchmark lending rate steady at its next meeting on September 19-20. Fed officials haven't ruled out raising rates again in future, if needed.
The annual personal consumption expenditures (PCE) price index rose 3.3% in July, up from a two-year low of 3.0% a month earlier, the Commerce Department announced in a statement.
The move was fueled by an increase in the price of services, which recorded a 12-month rise of 5.2% -- in stark contrast with the price of goods, which decreased 0.5%.
Core PCE, excluding volatile food and energy costs, also ticked up in July to an annual rate of 4.2%.
Month-over-month, PCE increased by 0.2%, as it did in June.
Personal income, meanwhile, increased at a monthly rate of 0.2%.
"The data bear watching for a reversal of progress on inflation although our estimates suggest prices pressures will ease over the remainder of the year," Rubeela Farooqi, High Frequency Economics' chief U.S. economist, wrote in a note to clients.
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