U.S. underlying inflation surged for a second straight month in July, reducing expectations that the Federal Reserve will cut interest rates by half a percentage point next month.

The Labor Department reported Thursday that so-called core CPI — the consumer price index excluding the volatile food and energy components — jumped 0.3% last month, matching June’s gain. The two-month increase is the strongest in more than a decade.

In the 12 months through July, the core CPI climbed 2.2%, the biggest gain in six months, after rising 2.1% in June.

The overall consumer price index also rose 0.3% in July after increasing 0.1% in the previous two months, reflecting gains in the cost of energy products and a range of other goods. It increased 1.8% year on year after advancing 1.6% in June.

Michael Feroli, chief U.S. economist at JPMorgan Chase, told The Wall Street Journal that “large [price] increases in import-dependent categories like information-technology commodities and household furnishings and supplies” were a sign that the Trump administration’s tariffs were starting to fuel inflation.

The Fed, which has a 2% inflation target, cited weak inflation and trade concerns when it lowered interest rates last month for the first time since 2008.

The July report “lowered the chances that the U.S. central bank would cut rates by half a percentage point at its Sept. 17-18 policy meeting,” Reuters said, noting that financial markets have fully priced in a 25-basis-point reduction.

According to the WSJ, it remains to be seen whether “the June-July pickup reflects a long-awaited acceleration in price pressures — as economists’ models have been predicting for years, only to be proven wrong — or merely a bounceback from several months of low inflation earlier this year.”

The core CPI was boosted in July by increases in prices for apparel, airline tickets, health care, and household furnishings.

“Despite the modest acceleration in core inflation, the Fed is still expected to lower the fed funds rate by a quarter-point two more times in 2019 as global headwinds intensify,” said Scott Anderson, chief economist at Bank of the West.

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