US consumer prices rose as expected in July, which could comfort Federal Reserve officials worried about low inflation as they weigh trimming their massive bond buying programme.

The Labor Department said today its Consumer Price Index rose 0.2 per cent as the cost of goods and services ranging from tobacco to apparel and food increased. The CPI had increased 0.5 per cent in June.

July’s increase in consumer inflation was in line with economists’ expectations.

In the 12 months through July, the CPI advanced 2.0 per cent, the largest increase since February, after increasing 1.8 per cent in June.

The push in inflation to the Fed’s 2 per cent target could offer some comfort to some central bank officials who have warned on the potential dangers of inflation running too low.

Stripping out energy and food, consumer prices rose 0.2 per cent for a third straight month.

That took the increase over the past 12 months to 1.7 per cent. The core CPI had gained 1.6 per cent in June.

The uptick in prices fits in with Fed chairman Ben Bernanke’s views that the low inflation was temporary.

The US central bank has said it plans to start trimming the $85 billion in bonds it is purchasing each month to keep borrowing costs low later this year.

Most economists anticipate the Fed will make an announcement in September on the future of the bond purchasing programme.

In July, prices for new motor vehicles, apparel, tobacco, medical care and shelter increased. (Reuters)