(CN) – U.S. consumer prices rose just 0.1% for the second straight month, signaling inflation is tame as the Federal Reserve looks likely to cut interest rates at the end of July.
The modest increase in June for what American consumers pay for a wide range of products mirrors the barely noticeable uptick seen in May.
Costs for rent, clothing and cars increased while gas and electricity prices fell, according to a Labor Department report issued Thursday. The overall consumer price index is up 1.6% from a year ago.
But excluding the always volatile food and energy sectors, core consumer prices increased 0.3% in June, the largest gain in a year and a half, and are up 2.1% from this time last year.
Federal Reserve Chairman Jerome Powell signaled Wednesday that the central bank is likely to slash short-term interest rates at its July 30 meeting because inflation has stayed below the 2% annual target.
President Donald Trump and others have called for a rate cut to boost economic growth, as the U.S. economy marks 10 consecutive years of expansion.
Gas prices dropped 3.6% last month, while electricity costs fell by 0.8%. Meanwhile, rent and used vehicle costs rose by 0.3% and 1.6%, respectively. Food prices stayed flat.
Also on Thursday, the Treasury Department reported that the U.S. budget deficit increased by $140 billion in the first nine months of the fiscal year to $747.1 billion. Government spending and revenues both hit record highs.
At the same time, the Dow Jones Industrial Average crossed 27,000 points for the first time on gains of health care stocks and expectations that the Fed will cut rates.