US Inflation Eases to 3.4%, Still Outpaces Paychecks

The US inflation rate continued to cool down in July, but it's still outpacing paychecks. According to the Labor Department, consumer prices rose by 0.1% from June to July, which is in line with forecasters' expectations.

Over the year, prices were up 3.4%, a slower pace than before. The annual inflation rate had surged since the start of the Iran war, driving gas prices up and reaching 4.2% in May. It fell to 3.5% in June and now stands at 3.4%.

Average hourly earnings for employees on private nonfarm payrolls rose just 3.2% over the year in July, which means their paychecks may not be keeping up with inflation. The Federal Reserve officials have promised to deliver price stability, but inflation remains above their 2% target, as it has for the past five years.

Core inflation, which excludes volatile food and energy costs, rose by 0.2% over the month and was up 2.5% over the year in July. Gas prices are still up 24.6% over the year, but they were lower last month on average than in June.