Key facts
- US annual inflation eased to 3.4% in July, down from 3.5% in June.
- Core inflation increased slightly to 2.5% year-over-year and 0.2% month-over-month.
- Gasoline prices are up approximately 15% compared to the previous year.
- US employers lost 23,000 jobs in July, with previous job gains revised down.
- Federal Reserve officials are split on the need for further interest rate hikes.
US consumer prices rose 3.4% in July from a year ago, a slight decrease from 3.5% in June, as falling energy and grocery costs offered some relief. However, prices remain elevated compared to pre-conflict levels, and core inflation, which excludes volatile food and energy prices, increased slightly to 2.5% year-over-year and 0.2% month-over-month.
Gasoline prices, though down nearly 3% in July, are still about 15% higher than a year ago, averaging $4 a gallon nationwide. Brent crude prices saw an increase in July after a peace deal between the US and Iran collapsed, impacting the Strait of Hormuz, a critical oil transit route.
The inflation data was released alongside a disappointing jobs report showing US employers unexpectedly lost 23,000 jobs in July, with prior months' gains significantly revised downward. Real wage gains for hourly employees were erased by inflation, decreasing by 0.2% after adjustments.
The Federal Reserve is currently divided on its next monetary policy move. Roughly half of the rate-setting committee members favor raising interest rates, while the other half believe current rates are sufficient to gradually bring inflation back to the 2% target. Fed Chair Kevin Warsh has emphasized a commitment to price stability and a cautious approach, not basing decisions on single monthly reports, though some regional Fed presidents, like Lorie Logan, are pushing for rate hikes due to persistently high inflation.