The CPI rose 2.1% in November on a year-on-year basis but the Fed "doesn’t expect inflation to sharply exceed its 2% goal anytime soon."
The July inflation readings reduce "the chances that the U.S. central bank would cut rates by half a percentage point" in September.
“The uptick in inflation, being largely driven by higher gas prices, is unlikely to worry investors or the Federal Reserve."
The Fed will view the first decline in the CPI since March as "further proof that price pressures are building more slowly than some have feared."
"The inflation picture is still fairly tame, certainly not heating up enough to push the Fed to a more aggressive stance."
The increase was the largest since September 2008 but economists see core inflation easing by the end of the year.
The trend of steadily building inflation pressures could prompt the Federal Reserve to continue raising interest rates, analysts said.
The steady rise in inflation may make it less likely that the Federal Reserve will raise interest rates more aggressively.
After the CPI gained 0.5% in January, a 0.9% decline in gasoline prices helped keep inflation in check last month.
The recent mini-surge in consumer prices may ease as oil refineries resume normal service after the disruptions of Hurricane Harvey.
Core consumer prices increased 0.4% in May, pushed up by high rents for primary residences, said the Labor Department.
Energy prices rose 3.4%, including an 8.1% increase in the amount consumers paid for gasoline.
