US Inflation Remains Elevated Amid Trade Tensions and Iran War
The US inflation rate remains elevated despite ongoing trade tensions and the Iran war, which has pushed gas prices high. The Commerce Department reported that prices rose 3.7% in July compared to a year earlier, remaining above the Federal Reserve's target of 2%. This marks an increase since the Iran war began in late February, when inflation stood at 2.9%.
The stubbornly high prices are shaping up to be a key issue in the midterm elections, particularly with President Donald Trump threatening new tariffs on Canada and China, and spending on AI infrastructure driving up costs of computers, gaming consoles, and semiconductors.
New Fed Chair Kevin Warsh is set to deliver a speech this Friday in Jackson Hole, Wyoming, which will be closely watched by Wall Street for any signs of his thinking about next steps. The split among Federal Reserve officials continues, with most willing to hold interest rates steady to see if inflation can cool on its own.
Excluding food and energy categories, core inflation was also unchanged at 3.3% in July. Some Fed officials have said that core inflation running at about 0.2% a month would be a reassuring sign that inflation is heading back to the 2% target.