The highly anticipated US Consumer Price Index numbers for July are out, and they show that inflation in the largest economy is lower than previously expected.

The regular CPI came in at 2.7% year-over-year, compared to the 2.8% estimate provided by the experts. The Core CPI, which excludes volatile sectors such as energy and food, is 3.1% (0.1% higher than previously thought).

U.S. CPI: +2.7% YEAR-OVER-YEAR (EST. +2.8%)

U.S. CORE CPI: +3.1% YEAR-OVER-YEAR (EST. +3.0%)

The latest data should be viewed as a positive sign for crypto bulls, as it may encourage the Federal Reserve to lower interest rates after its next FOMC meeting in September.

After all, the central bank aims for a healthy inflation rate of around 2%, and the number has been heading in that direction over the past few months.

It is important to note that the US CPI data isnt the only factor the Federal Reserve monitors when deciding on a potential rate cut. The latest jobs report in America showed the economy is in a weaker-than-expected condition, which increases the chances of lowering the benchmark.

Bitcoin (BTC) reacted positively to the CPI report, spiking above $119,000. Ethereum (ETH) performed even better, with its valuation surging to $4,350.

BTC Price, Source: TradingView