Energy Prices Fall Again, But Inflation Remains High

Inflation slowed down in July as energy prices dropped for the second straight month. The consumer price index showed that prices increased by only 0.1% for the month, but over the 12-month period ending in July, consumer prices rose 3.4%, down from 4.2% in the year ending in May.

The decline in energy costs was largely due to a ceasefire between Israel and Iran that temporarily halted fighting, but renewed conflict in the region has disrupted movement through the Strait of Hormuz, contributing to higher energy costs. The average price of a gallon of gas was 16 cents higher than a month ago, according to AAA.

Despite the decline in the annual rate, inflation remains well above the Federal Reserve's 2% target. Food costs also remain above the Fed's target, with Americans spending 3% more on food over the past year, and shelter costs rose 3.2%. The annual inflation rate has roughly kept pace with increases in average weekly wages over the past year.