Stripping out volatile food and energy costs, core inflation slipped to an annual rate of 2.5% in July, down from 2.6% in June. Even so, oil prices remain elevated and gasoline costs rose in late July and August, suggesting overall inflation could accelerate next month. Rising costs for services often reflect higher wages, as companies charge more to offset the cost of higher pay. Yet many other firms are still passing on higher costs. Long-term interest rates rose after Warsh's comments, suggesting investors worried that inflation could worsen in the coming months and the Fed might not lift borrowing costs to fight rising prices.