Washington - US inflation was the highest in 17 years in July as consumer prices rose 5.6 per cent year-on-year, the Department of Labor reported Thursday.

The cost of living index jumped 0.8 per cent from June to July on a seasonally adjusted basis, higher than forecasts, after a 1.1 per cent increase in June.

The increase reflects higher energy and food prices. Energy prices, led by petrol, rose 4 per cent in July, accounting for about half of the increase. However fuel prices have since fallen, signalling July's figures could be a possible peak in inflation.

Food prices rose 0.9 per cent, with the cost for groceries rising to 1.2 per cent after a 1 per cent increase in June.

Core prices, which do not include food and energy, increased in July, by 0.3 per cent, for a year-on-year rise of 2.5 per cent. Prices for clothing and recreation rose more quickly in June, but costs for housing and medical care did not increase as quickly, the statistics said.

Last week the US central bank left interest rates unchanged - at 2 per cent - as it continues to balance concerns about sluggish economic growth and inflation. High inflation has prompted some calls for the central bank to consider raising interest rates again.