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Underlying US inflation accelerated in July though the cost of tariff-exposed goods didn’t rise as much as feared, boosting expectations that Federal Reserve officials will lower interest rates when they meet next month.

The core consumer price index, which excludes the often volatile food and energy categories, increased 0.3% from June, the strongest pace since the start of the year, according to Bureau of Labor Statistics data out Tuesday. That was in line with economists’ forecasts, as was the overall CPI on a monthly basis.

The pickup in the core CPI was fueled by services prices. Excluding energy, they climbed the most since the start of the year. Airfares jumped by the most in three years, while medical care and recreation also advanced. Goods prices, excluding food and energy commodities, rose at a tame pace. Some categories exposed to tariffs, such as toys, sporting goods and household furnishings and supplies, continued to increase, albeit at a slower pace than the prior month. Meantime, used car prices rebounded from a series of declines.

The reacceleration in services costs, after months of more subdued prints, underscores the lingering difficulties in taming inflation. Economists and policymakers have been largely concerned about rising goods prices given President Donald Trump’s sweeping tariffs, but a pickup in consumer demand could fuel services inflation.

Today's show features:

• Pooja Sriram, Vice President of US Economics Research at Barclays, on the latest US inflation print and Bloomberg TV Radio International Economics and Policy Correspondent Mike McKee on Federal Reserve and White House news
• Shehzad Qazi, Chief Operating Officer and Managing Director of China Beige Book, on China’s response to what it calls US “protectionist measures,” and Bloomberg Economics Geo-Economic Analyst for Latin America Jimena Zuniga on
  Brazil seeking support from BRICS partners for a joint response to US tariffs.
• Bloomberg News Treasury Reporter Daniel Flatley and Bloomberg New Economy Reporter Editorial Director Erik Schatzker on their Bloomberg Big Take and upcoming Businessweek cover story on Treasury Secretary Scott Bessent

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