US Inflation Remains Stubbornly High Despite Gas Price Drop

Despite gas prices falling, inflation remains high in the US, reaching 3.7% in July compared to a year ago, according to the Commerce Department's personal consumption expenditures price index.

This is the same rate as June and significantly above the Federal Reserve's target of 2%. The increase is largely driven by rising costs for services such as healthcare, utilities, and financial services.

The government plans to adjust its method for calculating some service prices starting next month, which could lower measured inflation. However, economists predict this change will only reduce annual PCE inflation by 0.2 percentage point or so.