US prices rose 3.4% in the year to July, slightly lower than the 3.5% in the year to June, new figures show.
Month to month, inflation rose 0.1%, mainly due to an increase in housing costs, the Bureau of Labor Statistics said. Even small moves in rent can lift the overall headline figure as it makes up a large share of household spending.
Food prices rose only slightly in July and at a slower rate than in June, while energy prices fell, offering some relief for consumers.
Prices excluding food and energy rose 0.2% after staying flat in June, with medical care and airline tickets edging higher and car insurance continuing to fall.
The new Federal Reserve chair, Kevin Warsh, has said the central bank's priority is to "keep inflation moving down" while avoiding unnecessary shocks to the economy.
President Donald Trump has also said inflation is still too high for many families, pointing to rent and grocery bills as signs that costs of living remains a major concern.
