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Consumer prices up slight 0.1 percent in July

WASHINGTON (AP)  Consumer prices posted a slight gain in July, with higher costs for medical care and clothing offsetting declines for hotel stays and consumer cellphone plans.

The Labor Department said Friday that its consumer price index edged up 0.1 percent last month after no gain in June and a 0.1 percent fall in May. Core inflation, which excludes volatile energy and food changes, was also up a slight 0.1 percent in July.

Both overall inflation and core inflation have risen an identical 1.7 percent over the past 12 months. That shows that inflation pressures remain well under control. In fact, a separate inflation gauge favored by the Federal Reserve has been slowing this year, raising concerns that inflation is falling farther from the Fed's 2 percent goal.

The Fed has raised its benchmark interest rate in March and June, and has signaled it plans a third rate hike before year's end. But private economists say the Fed may stand pat for the rest of 2017 unless inflation accelerates in coming months. The Fed's preferred inflation gauge showed a 12-month price gain of 2.2 percent in February, but its latest reading has slowed to a gain of just 1.4 percent.

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