US Inflation Cools to 3.4% in July

5% increase, the Bureau of Labor Statistics reported Wednesday. 1% economists expected. 2% on the month, in line with forecasts. 5%, again matching expectations.

The print lands four days after the July jobs report showed payrolls contracting by 23,000 against expectations of a roughly 80,000 gain. Odds of a September interest-rate increase by the Federal Reserve, as priced in by the rate futures market, stood at 45% ahead of the release. Where Did Prices Rise And Fall Last Month? Shelter was the biggest contributor to monthly inflation.

1% increase. 1%. But the details were mixed. 7% decline in the index for meat, poultry, fish and eggs.

Restaurant prices moved in the opposite direction. 4%. Energy provided the biggest relief. 9%.

That decline matters because energy remains much more expensive than a year ago. 6%. Services were less cooperative. 2% in July after being unchanged in June.

6%. Shelter remains the bigger issue, however. 2% from a year earlier, keeping pressure on the broader services inflation picture. There were some signs of easing underneath the surface.

8%. The result is an inflation report that gives the Federal Reserve some room, but not necessarily a clear green light. Market Reaction: Stocks Rise, Yields Fall Markets initially treated the report as a modest positive for risk assets. 2%.

2%. The bond market delivered a clearer signal. 18% after the data, down by about 2 basis points. The dollar also weakened.

S. 30% to around $4,427 an ounce. The move in interest-rate expectations was particularly notable. Before the CPI release, markets had priced a 43% probability of a rate hike at the Federal Reserve's September meeting.

The probability of leaving rates unchanged stood at 57%. 4% probability of a September hike. Image: Shutterstock