The Federal Reserve’s preferred inflation gauge held steady in July even as President Donald Trump’s sweeping tariffs added pressure on the economy, but a key measure of underlying prices climbed to the highest level in five months.The Commerce Department on Friday said overall prices rose 2.6% in July from a year earlier, unchanged from June, AP reported. Excluding food and energy, core prices increased 2.9% year-on-year, up from 2.8% in June and the sharpest since February.The figures highlight why many Fed officials remain reluctant to ease borrowing costs. Inflation has cooled sharply from its 7% peak three years ago but continues to run above the central bank’s 2% target.The report also offered some signs of resilience in household demand. Consumer spending jumped 0.5% in July, the biggest monthly gain since March, with strong outlays on cars, appliances and furniture. Incomes rose 0.4% over the month, boosted by wage and salary gains.On a monthly basis, overall consumer prices rose 0.2% from June, down from 0.3% in the previous month, while core prices advanced 0.3% for the second consecutive month. The trend closely tracked the consumer price index, which earlier this month showed a 2.7% annual rise, with the core CPI up 3.1% in July.Fed Chair Jerome Powell has signalled that the central bank is likely to cut its key interest rate at its next meeting but stressed that policymakers will proceed cautiously. “It’s not clear how many more rate cuts will happen this year,” he said.When the Fed lowers its benchmark rate, borrowing costs for mortgages, car loans and business lending typically fall, though not always.Trump, meanwhile, has continued to berate Powell and the Fed over monetary policy. Since earlier this year, the president has labelled Powell “Too Late” and a “moron,” insisting there is “no inflation.” On Monday, Trump sought to fire Lisa Cook, a member of the Fed’s board, in what analysts saw as a bid to assert greater control over the central bank.