Higher energy prices helped push overall consumer prices up moderately last month, reinforcing the Federal Reserve's view that inflation in the United States is likely to ease in the coming months.

When the volatile prices of energy and food are set aside, inflation actually slowed in July, giving investors hope that the U.S. central bank might be through raising interest rates for a while. Stocks moved higher on the news.

The consumer price index, which measures what everyday Americans pay for goods and services, rose 0.4 percent in July. The core index, excluding food and energy, rose 0.2 percent in July, a slower rate than in the previous four months.

Over all, the report was not as encouraging for investors as the figures Tuesday on the producer price index, which fell in July when food and energy were omitted. Still, the news was well received on Wall Street, where investors added in early trading Wednesday to the healthy gains Tuesday in stock and bond prices. The Standard & Poor's 500 index, the Dow Jones industrial average and the Nasdaq composite all rose.

When the Federal Reserve held its benchmark overnight lending rate steady at 5.25 percent last week the first time in two years that the Fed's policy committee had met without raising the rate it cautioned that inflation would remain a problem, but would eventually be contained by a slowing economy.

Despite the slower growth in the core rate, the report Wednesday showed that inflation was higher than the Fed wanted it to be. For the first seven months of the year, consumer prices grew at a seasonally adjusted annual rate of 4.8 percent; that compares with a rate of 3.4 percent for all of 2005.

Economists said the softer inflation data in the report Wednesday was a positive development, but they cautioned against basing any conclusions on data for just one month.

"Let's wait and see," said Lynn Reaser, chief United States economist for Bank of America. "Today's report may not in fact represent a total victory for the Fed, but it certainly must be a welcome piece of news for them, and gives them some respite."

Energy prices provide much of the upward pressure. Through July, the Labor Department's index for energy prices rose at an adjusted annual rate of 25.3 percent; the rate for 2005 was 17.1 percent. "Along with yesterday's surprisingly tame PPI report, today's CPI report is being interpreted as evidence that inflation pressures are abating," said Stuart Hoffman, chief economist with PNC Financial.