US Inflation Holds Steady at 3.7% Despite Fed Pressure

Inflation remains stubbornly high in the United States, according to the latest data from the Commerce Department. The personal consumption expenditures price index (PCE) rose by 3.7% in July compared to a year earlier, matching June's figure and remaining above the Federal Reserve's target of 2%. This marks a significant increase since the US and Israel attacked Iran in late February, when inflation stood at 2.9%.

The PCE index is running hotter than the consumer price index (CPI), which has been cooling steadily in recent months. Excluding food and energy categories, core inflation was unchanged at 3.3% in July, after falling to 2.6% before President Donald Trump imposed tariffs on imports from China in April.

The Commerce Department plans to adjust its measurements of the cost of financial advice, software, and computer accessories starting next month, which could lower measured inflation by 0.2 percentage points or more. Economists agree with this change, which aims to better capture what Americans actually pay for these services.