Evans said that "unless the data and the forecast change dramatically" he believed the Fed could wait until December before moving again to boost its benchmark rate, which is now at a still-low level of 1 percent to 1.25 percent. "The index for other food at home was unchanged in July after falling in May and June".
By way of backdrop, note that USA inflation has eased back in recent months after lifting tantalising close to the Fed's 2% inflation target earlier this year. Overall consumer prices rose by 0.1% from June, putting them just 1.7% above their year-earlier level. Just when the Fed though it had won the inflation battle, victory was snatched from its hand's within a matter of months.
Five months of 0.1% growth or lower in core CPI marks "a remarkable run in the context of an economy that is clocking above trend growth and a labor market that has moved well into tight territory", said Stephen Stanley, chief economist at Amherst Pierpont. That lifted the year-on-year increase in the CPI to 1.7 per cent from 1.6 per cent in June.
The so-called core CPI, which excludes food and energy, also rose by 0.1% in July, missing the 0.2% forecast.
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Thursday's figures suggest that today's figures may be on the softer side, which could see the markets right-off a final rate hike for the year, which will be Dollar negative for the day.
The Fed's favoured measure of inflation lags even further behind, with the PCE measure now registering an annual rate of 1.4% in June.
RPI, a separate measure of inflation which includes council tax and mortgage interest payments, is expected to grow by 3.5% in July, the same rate as June.
"Today's report is just the sort of ammunition the Fed doves need to argue against additional rate hikes this year", said Chris Rupkey, chief financial economist at MUFG in NY, referring to the group of Fed officials who generally argue for a go-slow approach to hiking interest rates.
The modest gain in consumer prices could worry Fed officials, who have largely viewed the retreat in inflation as temporary. Unemployment in July returned to a 16-year low of 4.3 percent. However, further economic data releases in the next months will give a clearer picture on inflation before Fed policymakers gather to decide on the future rate path.