US Inflation Eases Slightly in July

US inflation showed further signs of cooling in July 2026, although price pressures remained above the Federal Reserve's target. Consumer prices increased 0.1% month-on-month, following a 0.4% decline in June, while annual inflation eased to 3.4% from 3.5%, according to the Bureau of Labor Statistics.

Energy Prices Offset Higher Service Costs

Shelter costs rose 0.1% and accounted for roughly two-thirds of the overall monthly increase. Other key components showed mixed price movements:

Food: +0.1%
Food away from home: +0.3%
Energy: -1.5%
Core CPI: +0.2%

Lower energy prices helped limit headline inflation despite continued increases across several service categories. However, energy costs remained 14.7% higher year-over-year.

Core inflation, which excludes food and energy, increased 0.2% on the month after remaining unchanged in June. Prices rose for medical care, airline fares, communication, education, and recreation, while motor vehicle insurance declined.

On an annual basis, core inflation eased to 2.5% from 2.6%. The latest figures suggest underlying price pressures are gradually moderating, although headline inflation remains elevated and energy costs continue to pose a risk to the broader inflation outlook.

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