The growth rate of US consumer inflation slowed in July.

Amid growing expectations that the Federal Reserve, the U.S. central bank, might soon need to raise interest rates due to inflation concerns, today's data is expected to provide some breathing room for the Fed's response to price pressures.

The U.S. Bureau of Labor Statistics announced on the 12th (local time) that the U.S. Consumer Price Index (CPI) for July rose 3.4% compared to the same month last year.

The growth rate slowed compared to June (3.5%) and met expert forecasts compiled by Dow Jones.

The month-on-month growth rate remained at 0.1%.

Core CPI, which excludes energy and food, rose 2.5% year-on-year, also slowing down from June (2.6%).

On a monthly basis, it rose 0.2%.

The year-on-year and month-on-month growth rates for both the headline and core CPI released today matched expert expectations compiled by Dow Jones.

Energy prices, which fell 5.7% month-on-month in June, dropped another 1.5% in July, contributing to the slowdown in the overall inflation rate.

Shelter costs, which had been the main factor keeping consumer price inflation stubborn, also saw a month-on-month growth rate of just 0.1%.

With U.S. consumer inflation slowing from 4.2% in May to 3.5% in June and continuing its downward trend in July, observations are emerging that the Fed may keep interest rates frozen for a while to observe economic trends further.

As newly appointed Fed Chair Kevin Warsh pursues policies that minimize monetary policy guidance, market participants have kept a close eye on consumer price indicators to gauge the Fed's future policy moves.

According to the Chicago Mercantile Exchange's (CME) FedWatch, prior to the release of the consumer price data, the fed funds futures market viewed the probability of the Fed freezing interest rates or raising them by 0.25 percentage points at the upcoming September Federal Open Market Committee (FOMC) meeting as a 50-50 split.

However, immediately following the consumer price release, the probability of a rate freeze rose slightly to 58%.

Mohamed El-Erian, chief economic adviser at Allianz, posted on X (formerly Twitter) that today's CPI came in exactly in line with market consensus across the board, noting that the market reaction is somewhat subdued but favorable.

Joe Brusuelas, chief economist at RSM, told CNBC that the latest indicator will provide a boost to Chair Warsh, who has faced challenging policy hurdles since taking office in May.

(Photo: AP, Yonhap News)