The US Bureau of Labor Statistics released its July Consumer Price Index on Thursday, offering the Federal Reserve fresh evidence on whether tariff-related price increases are feeding into broader inflation ahead of the central bank's September meeting. Economists surveyed by Bloomberg had forecast headline inflation near 3% year on year.

Months of import duties introduced by the Trump administration have pushed up the cost of goods ranging from furniture to household appliances. Fed officials, including Chair Jerome Powell, have said they want to assess whether tariff effects prove to be one-off adjustments or a more persistent driver of prices.

Core inflation, which excludes volatile food and energy costs, drew particular scrutiny from investors seeking clues on the path of interest rates. Traders in federal funds futures had priced in a strong likelihood of a rate cut in September, according to the CME FedWatch tool, though a hotter reading could reduce those expectations.

The data landed alongside a busy stretch of second-quarter corporate earnings, with major US companies reporting results that reflected the strain of higher input costs and cautious consumer spending. Equity markets were sensitive to both the inflation figures and any signals from the Fed on its policy trajectory.

Analysts at institutions including Goldman Sachs and JPMorgan were expected to publish revised rate-path forecasts in response.