Consumer Prices Rise 0.3 Percent
WASHINGTON (AP) _ Consumer prices rose a moderate 0.3 percent in July despite the fact that gasoline prices jumped sharply and airline fares went up at the fastest pace in six years.
The Labor Department reported today that July’s increase in its Consumer Price Index _ the most closely watched gauge of inflation _ followed two straight months in which prices remained frozen.
July’s inflation report was right in line with many analysts’ expectations and was expected to further ease inflation concerns in financial markets.
Stock prices have been rallying since Friday, when the government reported that prices at the wholesale level rose just 0.2 percent in July.
However, many analysts and investors continue to believe that despite the tame inflation reports the central bank will raise interest rates next week for the second time this year _ but only by a quarter of a point.
And with inflation moderating after a spike in April, many analysts believe the central bank will see no need to embark on a series of rate increases.
The 0.3 percent increase in the CPI was the biggest since a 0.7 percent surge in April, the largest one-month gain in nine years. That April increase had put on the Fed on inflation alert and was followed by a June 30 Fed increase in interest rates, the first in two years.