US Inflation Stuck at 3.7%, Fed Points to War, Tariffs, and AI Demand

Inflation held steady at 3.7% in July for the second consecutive month, according to the Commerce Department's latest personal consumption expenditures report.

The Federal Reserve's Monetary Policy Report identified three major sources of price pressure: the war with Iran, tariffs, and rising demand for technology driving costs higher.

Gasoline and other energy goods fell 2.7% from June but were approximately 25% more expensive than in July 2025, according to Ken Kim, a senior economist at KPMG.

The Fed's report said tariff effects cannot be observed directly in official consumer-price data, but pricing patterns suggest tariffs contributed in part to faster increases for import-heavy products, including household appliances and some consumer electronics.