US consumer prices cooled for a second consecutive month in July, with the annualized inflation rate dipping to 3.4%, down from 3.5% in June. The consumer price index rose 0.1% from the previous month, a reading that aligned with economists' expectations and indicated cooler price pressures.
Food costs slowed during the month, while housing costs kept prices slightly higher. Energy prices have dropped since their peak in late April, though gasoline remains nearly a dollar per gallon more expensive than it was before the war with Iran. Despite recent dips, consumer prices remain higher than levels seen before the conflict.
This cooling trend follows a period of significant volatility, as annual inflation hit a three-year high of 4.2% in May. In June, inflation decreased 0.7% during a brief ceasefire between the US and Iran that brought down energy prices, although general consumer prices have otherwise remained elevated.
The subdued underlying inflation in July is likely to ease pressure on the Federal Reserve to raise interest rates in September. Because the report met forecasts, it provides no fresh ammunition for either side of a divided Federal Reserve ahead of next month's rate decision.