Key US inflation measure falls 0.1% in July

A key measure of U.S. prices slowed sharply in July largely due to a steep drop in energy prices, according to government data Friday.

After rising steadily for months, the Federal Reserve's preferred inflation index fell 0.1 percent compared to June, the Commerce Department reported -- far lower than economists had projected. It rose just 0.1 percent when food and energy are excluded.

That is good news for the Fed, which has been aggressively raising interest rates to try to tame high inflation, exacerbated by the surge in global oil prices due to Russia's war in Ukraine as well as ongoing supply chain issues made worse by Covid lockdowns in China.

Americans have gotten relief at the gas pump in recent weeks, and the report showed energy prices fell 4.8 percent last month, but food prices accelerated 1.3 percent. 

Compared to July 2021, the personal consumption expenditures price index slowed to 6.3 percent, and was down to 4.6 percent for the "core" which leaves out volatile food and energy components, the data showed.

Meanwhile, consumers continued to spend, and expenditures increase $23.7 billion or 0.2 percent in the month.