US consumer inflation mild in July, but economy not out of the woods yet

U.S. consumer prices barely increased in July as the cost of gasoline declined for a second straight month, while underlying inflation was benign, further reducing the odds of an interest rate hike from the Federal Reserve next month.

The small rebound in the monthly Consumer Price Index reported by the Labor Department on Wednesday, which was in line with economists' expectations, also reflected marginal gains in the prices of food and apparel as well as decreases in the costs of hotels and motel rooms, and prescription medication.

The Consumer Price Index edged up 0.1% last month after dropping 0.4% in June, which was the first decline in six years, the Labor Department's Bureau of Labor Statistics said.

A 0.1% rise in the cost of shelter accounted for roughly two-thirds of the gain in the CPI. Shelter was restrained by a 3.3% plunge in prices for hotel and motel rooms, likely linked to the end of the FIFA World Cup tournament. That offset a 0.3% increase in owners' equivalent rent. Gasoline prices fell 2.9% after decreasing 9.7% in June.