US consumer prices cooled slightly in July, with the annualized inflation rate dipping to 3.4 percent. This marks the second consecutive month of cooler price pressures, down from 3.5 percent in June and 4.2 percent in May, which hit a three-year high. The consumer price index rose 0.1 percent from a month earlier, aligning with economists' forecasts.
Energy prices declined 1.5 percent in July, though they remain 14.7 percent higher compared with a year ago. Gas prices remain nearly one dollar per gallon more expensive than before the war with Iran. While food costs slowed and wholesale inflation decelerated more than estimated, housing costs continued to keep prices slightly higher.
Overall prices remain higher than levels seen before the war with Iran, despite a brief ceasefire in June that brought energy prices down and decreased inflation by 0.7 percent. These subdued underlying readings may provide the Federal Reserve with more flexibility on interest rates ahead of the midterm elections and make it less likely that the Fed will feel the need to raise rates in September.