Inflation rose slightly in July as expected, a reading that could make the Federal Reserve less eager to hike interest rates.
The Bureau of Labor Statistics said prices rose 0.1% for the month, with an annual rate of 3.4%. Indexes for shelter and food rose modestly after being unchanged in June.
“Indexes that increased over the month include medical care, airline fares, communication, education, and recreation,” the BLS said in its summary. “Conversely, the index for motor vehicle insurance was among the major indexes that decreased in July.”
The annual inflation rate remains well above the Fed’s 2% target, though signs of relative stability could make central bankers less eager to raise rates.
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Some Fed members had been pushing to increase rates to tame inflation, a move that would run counter to President Trump’s wishes.
The White House said core inflation, which measures prices minus food and energy, is closer to the Fed’s target — at 2.5% — and that July’s report showed signs of progress.
“The July CPI report is further proof that President Trump’s long-term agenda is delivering: prescription drug and auto insurance costs continue to fall, real wages are rising, and beef prices have cooled while other household essentials like eggs, poultry, and dairy remain low,” White House spokesman Kush Desai said on X.
The cost of living is a dominant theme in this year’s midterm campaign season.
Mr. Trump says he inherited an inflation mess and is slowly fixing it, though Democrats say he impeded progress with tariffs on imported goods and his war on Iran.
“Over the last year and a half, Trump and Republicans in Washington have ripped healthcare away from millions of Americans, forced families to pay expensive tariff taxes, and started a disastrous war with Iran,” Rep. Brendan Boyle, Pennsylvania Democrat and ranking member on the House Budget Committee, said. “Today’s report is yet another reminder that Trump’s promise to lower costs on ‘Day One’ was a lie.”
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Americans saw price relief in June, when the Consumer Price Index fell more than expected. Inflation eased due to a sharp decrease in energy prices alongside cooling tensions in the Middle East.
The U.S. and Iranian militaries reengaged, however, after a memorandum of understanding from mid-June fell apart.
Middle East mediators are trying to strike a new peace deal that would reopen the Strait of Hormuz, an oil chokepoint to commercial traffic.
Iran insists on maintaining some control over the flow of shipping through the strait, complicating matters. Tensions in the region have increased global oil and gas prices.
The average U.S. price of gas stood at $4.04 per gallon on Wednesday, a 36% increase from when the war started on Feb. 28.
Airlines have increased prices due to higher fuel costs.
The index for airline fares increased 2.2% in July after rising 0.2% in June.
