The Consumer Price Index (CPI) rose 0.2 per cent last month, data released by the Labour Department on Thursday showed. Inflation ticked down to 3.2 per cent on an annual basis, slightly higher than 3.0 per cent in June.
Economists surveyed by Reuters had anticipated inflation to rise 0.2 per cent last month and 3.3 per cent annually.
Housing was the primary driver in the rise in inflation last month. Housing costs increased 0.4 per cent in July and up 7.7 per cent from last year.
“The index for shelter was by far the largest contributor to the monthly all items increase, accounting for over 90 per cent of the increase,” the department said.
The food index increased 0.2 per cent and energy rose 0.1 per cent.
Core inflation – which excludes food and energy – climbed 0.2 per cent, unchanged from June. On an annual basis, core inflation increased 4.7 per cent after rising 4.8 per cent in June.
Thursday's report is unlikely to sway officials at the Fed to ease off on its restrictive monetary stance. The central bank's long-term inflation goal is 2 per cent.
The Fed raised interest rates to a 22-year high last month in its bid to quell the high cost of goods in the US. Annual inflation hit a peak of 9.1 per cent in June last year.
Raising interest rates typically mean a softening of labour market conditions – in the form of redundancies – but the jobs market has proven resilient in recent months. Unemployment remains at a near-historic low and, while job growth has cooled, it is still showing signs of strength.
But at 4.4 per cent, wage growth is still above inflation.
Fed chair Jerome Powell said policymakers will take a data-driven and meeting-by-meeting approach when discussing interest rates in subsequent meetings later this year.