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... Economists, however, cautioned that higher prices from President Donald Trump's sweeping tariffs were still coming. They argued that businesses continued to sell merchandise accumulated before the import duties came into effect. ...

"Investors might want to hold back on the no-inflation celebration, however, because the goods sitting on store shelves arrived on boats months ago and the tariff hikes have yet to be applied to the goods on ships steaming the consumers' way right now," said Christopher Rupkey, chief economist at FWDBONDS ...

The CPI rose 0.2% last month after a gain of 0.3% in June. The moderation reflected a 2.2% decline in gasoline prices. Food prices were unchanged after rising 0.3% for two straight months. Grocery store food prices fell 0.1% as a 3.9% drop in the cost of eggs more than offset a 1.5% increase in beef prices and 1.9% rise in the cost of milk.

In the 12 months through July, the CPI advanced 2.7%, matching the rise in June. Economists polled by Reuters had forecast the CPI would rise 0.2% and increase 2.8% on a year-over-year basis.

Excluding volatile food and energy components, the CPI rose 0.3%, the biggest gain since January, after climbing 0.2% in June. The so-called core CPI was lifted by higher prices for services, including a 4.0% rebound in airline fares as well as strong increases in the costs of healthcare and dental services.

The cost of household furnishings and supplies rose 0.7%, while footwear prices surged 1.4%. Motor vehicle parts and equipment prices vaulted 0.9%, driven by a 1.0% increase in the cost of tires.

The core CPI increased 3.1% on a year-over-year basis in July after an advance of 2.9% in June. ...