Photo taken on Aug. 11, 2021 shows a price board of a gas station in Arlington, Virginia, the United States. U.S. inflation remained elevated in July, but there were signs that inflation might have peaked amid pandemic-related supply constraints and the emergence of the Delta variant. The consumer price index (CPI) increased 0.5 percent in July after rising 0.9 percent in June, the U.S. Labor Department said on Wednesday. (Xinhua/Liu Jie)

WASHINGTON, Aug. 11 (Xinhua) -- U.S. inflation remained elevated in July, but there were signs that inflation might have peaked amid pandemic-related supply constraints and the emergence of the Delta variant.

The consumer price index (CPI) increased 0.5 percent in July after rising 0.9 percent in June, the U.S. Labor Department said on Wednesday. Over the past 12 months through July, the index increased 5.4 percent, the same increase as the period ending June and the largest 12-month increase since 2008.

Excluding the volatile food and energy components, the so-called core CPI rose 0.3 percent last month after increasing 0.9 percent in June. Compared with a year earlier, the core CPI rose 4.3 percent in July, slower than 4.5 percent in June.

"The moderation is a sign that the most acute frictions associated with the economy's reopening are beginning to ease," Sarah House and Shannon Seery, economists at Wells Fargo Securities, said Wednesday in note.

"However, the transition is far from over yet and price pressures have broadened out, which should keep inflation running noticeably above the Fed's target for a while," they said.

Diane Swonk, chief economist at Grant Thornton, a major accounting firm, noted that the peak so far in year-over-year increases in core inflation during the pandemic was the 4.5 percent in June.

"Core inflation is starting to show signs of cooling from the pandemic-induced surge during the spring months. Some of that is due to the emergence of the Delta variant, which could dampen inflation in August," Swonk said in a blog.

"It is notable that the Delta variant is disrupting both supply and demand, which will leave the Federal Reserve uneasy as we move into the turn of the year. The Fed is still expected to taper its asset purchases," she added.

The Fed has pledged to keep its benchmark interest rate unchanged at the record-low level of near zero, while continuing its asset purchase program at least at the current pace of 120 billion U.S. dollars per month until "substantial further progress" has been made on employment and inflation. 

Photo taken on Aug. 11, 2021 shows a gas station in Arlington, Virginia, the United States. U.S. inflation remained elevated in July, but there were signs that inflation might have peaked amid pandemic-related supply constraints and the emergence of the Delta variant. The consumer price index (CPI) increased 0.5 percent in July after rising 0.9 percent in June, the U.S. Labor Department said on Wednesday. (Xinhua/Liu Jie)