The Personal Consumption Expenditures index, a key inflation gauge used by the Federal Reserve to make interest-rate decisions, held steady in July according to new data from the Department of Commerce.

Prices across the U.S. rose at an annual rate of 2.6% last month, the same as in June and in line with economist forecasts. Core inflation, which excludes the more volatile food and energy categories, rose 2.9% from a year ago, up slightly from June's 2.8% and the highest since February, according to the report .

The figures illustrate why many Fed officials have been wary about cutting their benchmark interest rate. While inflation is much lower than the roughly 7% peak it reached three years ago, it remains above the central bank's 2% target.

Meanwhile, the report showed that con

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