US Inflation Slows, But Consumers Pull Back on Spending

Inflation in the US has slowed down in July, but consumers are pulling back on spending due to high costs. The Labor Department reported that consumer prices rose 3.4% in July from a year ago, down from 3.5% in June.

The decline in inflation is modest and comes as the Federal Reserve is divided over whether to hike interest rates to combat inflation. The Fed kept its rate unchanged at around 3.6% at a meeting last month, but with three dissenters favoring a rate hike.

Americans cut their spending by 0.6% in July, marking the biggest drop since May 2025. Excluding gas stations and auto dealers, retail sales fell 0.2%. The decline in spending is attributed to a waning boost from government tax refunds.