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Thu Jul 11, 2019, 12:36 PM

U.S. Underlying Inflation Firming; Labor Market Tightening


Lucia Mutikani

WASHINGTON (Reuters) - U.S. underlying consumer prices increased by the most in nearly 1-1/2 years in June amid solid gains in the costs of a range of goods and services, but that will likely not change expectations the Federal Reserve will cut interest rates this month.

Signs of a pick-up in underlying inflation, together with a strong labor market could, however, temper expectations that the Fed will lower borrowing costs at least twice this year.

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The Labor Department said on Thursday its consumer price index excluding the volatile food and energy components rose 0.3% last month. That as the largest increase since January 2018 and followed four straight monthly gains of 0.1%.

The so-called core CPI was boosted by strong gains in prices for apparel, used cars and trucks, as well as household furnishings. There were also increases in the cost of healthcare and rents. In the 12 months through June, the core CPI climbed 2.1% after advancing 2.0% in May.

But the overall CPI edged up 0.1% last month, held back by cheaper gasoline and food prices, matching May’s rise. It increased 1.6% year-on-year in June after rising 1.8% in May.

Economists polled by Reuters had forecast the CPI unchanged in June and the core CPI gaining 0.2%.

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https://www.reuters.com/article/us-usa-economy-idUSKCN1U61NR

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