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Tuesday, August 17, 1999 Published at 13:57 GMT 14:57 UK

Business: The Economy

US inflation shows slight rise

Shop prices rose in line with expectations

US inflation figures for July rose 0.3%, in line with expectations, but failed to quell fears over a hike in interest rates later this month.

The Consumer Price Index has risen 2.1% over the last 12 months.

July 's core CPI figure, which excludes the volatile food and energy sectors, rose 0.1%.

Analysts said they still expected the US Federal Reserve to raise interest rates by 0.25% when it met on 24 August, but that the latest figures backed up the feeling generated by last week's factory gate inflation data that the rise would be a one-off for the immediate future.

'Neutral' figure

Kathleen Stephansen, senior economist for Donaldson, Lefkin & Jenrette Securities, said the figure "will add to the market's comfort that the market has espoused since the Producer's Price Index statistic on Friday, the notion that the Federal Reserve will move once and that's it."

Barry Hyman, market strategist for Ehrenkrantz, King Nussbaum, said: "I'd say (the figure) is neutral to slightly positive.

"The numbers are right in line, both in the total CPI and the core rate.

"I think there will be enough doubt left on the inflation front for the Federal Reserve to raise rates on 24 August.

"Look for the market to quickly settle into more of its trading range until we get to the Federal Reserve meeting next week."

Transportation costs, up by 1.2%, were a big factor in pushing up the CPI in July.

Energy prices rose 2.1%, with petroleum up 4.3%. Food prices were more stable, increasing by just 0.2%

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