US Inflation Eases Slightly as Gas Prices Fall, but Costs Remain Elevated

U.S. inflation cooled slightly in July as gas prices fell by 2.9% from June to July, and grocery prices declined slightly. However, costs remain elevated, with prices rising more quickly than average wages.

The Consumer Price Index (CPI) increased 3.4% in July from a year ago, down from 3.5% in June. On a monthly basis, prices rose just 0.1% from June to July.

Excluding the volatile food and energy categories, core inflation slipped to 2.5% in July from a year ago, down from 2.6% in June. This marks a post-pandemic low reached in January and February before the Iran war.

The Federal Reserve's 2% target is still out of reach for many Americans, who are struggling with high gas and grocery prices. The Labor Department reported that inflation has been pushed higher by a series of shocks to the economy, including President Donald Trump's tariffs imposed last spring, higher gas prices stemming from the U.S attack on Iran, and a surge in investment in artificial intelligence infrastructure.