Inflation Eases, But Still Above Target as Fed Weighs Rate Hike

U.S. inflation slowed in July, according to data released by the Labor Department on Wednesday. Consumer prices rose 3.4% from a year ago, down slightly from June's 3.5%, but still higher than February's 2.4% when the Iran war began.

The modest decline could ease pressure on the Federal Reserve to raise its key interest rate to combat rising costs. However, prices are still rising more quickly than average wages, underscoring the struggle many Americans have with expensive groceries, gas, and healthcare.

Excluding food and energy categories, core inflation slipped to 2.5% in July from a year ago, down from June's 2.6%. Monthly increases at about 0.2% would be low enough over time to bring inflation closer to the Fed's 2% goal.