Consumer prices rose 0.1% in July, as expected, putting the annual rate at 3.4%

A key inflation reading Wednesday showed prices moderating across a range of goods and services, possibly taking the urgency out of an imminent interest rate hike.

The consumer price index , part of the Federal Reserve's inflation dashboard, showed a seasonally adjusted increase of 0.1% during July, according to the Bureau of Labor Statistics. Excluding food and energy, the so-called core CPI rose 0.2%.

On an annual basis, the inflation rates were 3.4% and 2.5%, both down 0.1 percentage point from June.

All of the readings were line with the Dow Jones consensus forecasts.

Though the levels held well above the Fed's 2% target, the tame monthly readings, coupled with similarly moderate levels in June, indicate that the energy-fueled burst earlier in the year is easing, though prices remain volatile and subject to constantly changing conditions in the Middle East .

Stock market futures rose following the release while Treasury yields were negative across the board. Traders further cut the probability for a September rate hike, lowering the odds to 42%, according to the CME Group's FedWatch gauge of futures prices.

Energy prices dropped another 1.5% for the month following a 5.7% decrease in June. Still, the sector saw an annual increase of 14.7% following sharp gains in prior months, including a 10.9% surge in March just after the attacks against Iran began.

Both food and shelter saw 0.1% increases in July. Shelter costs had been stubborn and a key contributor toward keeping the inflation rate above 2%. Even with the modest gain, shelter accounted for about two-thirds of the headline increase, the BLS said. The index was held in check by a sharp 2.8% decline in lodging away from home costs. A key measure that asks property owners what they could get in rent increased 0.3%.