Inflation Eases Slightly to 3.4%, Still Above Fed Target

US inflation eased slightly to 3.4% in July from a year ago, down from 3.5% in June, according to official data released by the Labor Department. Despite the modest decline, prices are still rising more quickly than average wages, underscoring the struggle many Americans have had with expensive groceries, gas, and healthcare.

The inflation rate is still higher than before the Iran war began in February, when it was 2.4%, and remains above the Federal Reserve's long-term 2% target. Energy prices led the line in terms of price increases, with gasoline up 24.6% from a year ago, but the energy index overall was 1.5% lower than a month ago.

Core inflation, excluding food and energy categories, slipped to 2.5% in July from a year ago, down from 2.6% in June. While this suggests that underlying price pressures are cooling, economists caution that oil prices remain elevated and gas prices rose in late July and August.