The U.S. Consumer Price Index rose 0.1% in July. The annual inflation rate slowed to 3.4% from 3.5% in June.
Core CPI, which excludes food and energy, increased 0.2% for the month. The annual core inflation rate reached 2.5%.
A 1.5% drop in the energy index helped moderate the headline figure. Shelter costs continued to rise and drove much of the monthly increase.
Cooling price pressures may reduce the need for a Federal Reserve interest rate hike in September. This data grants the Fed more flexibility to assess the impact of previous policy moves. The shift affects the profitability and outlook for banks and financial institutions.