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story.lead_photo.caption Shoppers look over a T-shirt display in the Levi’s store in New York’s Times Square in June. Clothing prices increased 0.4% last month, the Labor Department said Tuesday.

WASHINGTON -- U.S. consumer prices rose 0.3% in July, pushed higher by more expensive gas, medical care and housing.

The consumer price index increased 1.8% compared with a year earlier, up from 1.6% in June, the Labor Department said Tuesday. Excluding the volatile food and energy categories, core prices moved up 0.3% in July and 2.2% from a year ago.

The figures suggest that inflation is picking up slightly, though it remains modest. The economy is in its 11th year of growth, unemployment is low, and wages are growing modestly. These are trends that typically accelerate price gains. But many companies are reluctant to charge more in the face of online and global competition.

While last month's price gains were modest, they were widespread. Clothing prices increased 0.4%, prices of used cars and trucks moved up 0.9%, and prescription drug costs rose 0.4%. Airline fares jumped 2.3%.

Rents rose 0.3% and are up 3.5% in the past year. Hotel stays have gotten 4.6% more expensive in the past year.

There are some signs that higher wages may be having an effect. The cost of housing operations, such as cleaning, landscaping and moving, jumped 5.4% in the past year.

The Federal Reserve maintains a 2% inflation target to avoid the destabilizing effect of deflation, which can pull down prices and wages. It has mostly missed that target since it was established in 2012. Its preferred measure rose just 1.4% in June compared with a year earlier. That measure isn't as influenced by rental prices.

Fed Chairman Jerome Powell has cited tame inflation as a key reason the central bank cut short-term interest rates last month. Most economists expect further cuts this year to offset the negative effects of the United States' trade war with China.

Energy costs rose 1.3% in July as gasoline prices jumped 2.5%, though they have already fallen back this month and will likely keep doing so as oil prices are declining. The average price for a gallon of gas nationally was $2.64 Tuesday, down 15 cents from a month earlier.

One restraint on inflation last month was food prices, which were unchanged. Dairy prices fell in July while fruit and vegetable costs rose.

After the report Tuesday, traders trimmed slightly the amount of Fed easing they have priced in for this year while the 10-year Treasury yield climbed to its high for the day and the U.S. dollar gained.

The Fed's 2% inflation target is based on a separate Commerce Department index that tends to run slightly below the Labor Department's consumer price index. President Donald Trump has repeatedly cited low inflation in his criticism of the Fed and calls for deeper interest-rate cuts.

Faster inflation would strengthen the hand of policymakers who are reluctant to keep lowering borrowing costs after last month's quarter-point reduction, as employment and consumer spending remain solid. At the same time, the latest ratcheting-up of U.S.-China trade tensions and a deepening global economic slowdown are weighing on the outlook, with investors pricing in two to three more moves this year.

A separate Labor Department report Tuesday showed average hourly earnings, adjusted for price changes, rose 1.3% in July from a year earlier, after a 1.5% rise for June. Higher inflation tends to eat into wage gains.

Economists surveyed by Bloomberg had forecast the core gauge would rise 0.2% from the previous month and 2.1% from a year earlier, with the broader index rising 0.3% on the month and accelerating to 1.7% on a yearly basis.

Information for this article was contributed by Christopher Rugaber of The Associated Press and by Katia Dmitrieva of Bloomberg News.

Business on 08/14/2019

Print Headline: Consumers' costs edge up in July


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