US Inflation Slows in July but Remains Elevated at 3.4%

The US inflation rate cooled slightly in July as gas prices fell, but costs remain elevated. According to the Labor Department, consumer prices rose 3.4% in July from a year ago, down from 3.5% in June.

The decline may ease pressure on the Federal Reserve to raise interest rates to combat rising costs, but inflation is still higher than before the Iran war began in February, when it was 2.4%. Excluding food and energy categories, core inflation also slipped to 2.5% in July from a year ago.

Gas prices rose by 16 cents on average nationwide in late July and August, suggesting overall inflation could accelerate next month.

The Federal Reserve is sharply divided over whether it should hike interest rates to combat inflation, with some officials believing the central bank can leave its key rate on hold while inflation steadily declines.