The core index that omits energy and food costs also rose by 0.3% in June, but the annual rate ticked up to 2.8% from 2.7% and slightly above forecasts. Personal spending rose by 0.3%, below the 0.4% forecast but still suggesting consumers are willing to continue shopping.

Federal Reserve Chair Jerome Powell said interest rates are in the right place to manage continued uncertainty around tariffs and inflation, tempering expectations for a rate cut in September.

President Trump wants the Fed to slash borrowing costs, but the central bank is unlikely to take such aggressive steps even once it begins to lower interest rates.