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Report: US Inflation Eases in July

File - A detail from the front of the U.S. Federal Reserve Board building is shown in Washington.

Inflation in the U.S. economy rose at a slower pace during July.

Wednesday's Labor Department report showed overall prices rose just one-tenth of a percentage point in July, with prices up a meager two-tenths of a percent over the past year.

Outside the volatile areas of food and energy, so-called "core" prices advanced 1.8 percent for the year ending in July.

Officials of the U.S. Federal Reserve are watching inflation and the U.S. job market closely as they decide when and how quickly to raise interest rates.

Many economists predict the Fed will boost rates slightly in September. Analysts at Wells Fargo say the recent easing of inflation is not likely to delay the rate hike.

Low interest rates were intended to boost the economy during the financial crisis, but may no longer be needed. Fed experts say a two-percent inflation rate makes prices stable and predictable, and helps the economy.

Inflation has been running below that level for some time.

Thursday, the Fed will get new data on the job market when the government reports the number of Americans signing up for unemployment compensation.