Consumer prices rose modestly in July, easing pressure on Federal Reserve

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. Gas prices are displayed electronically at QT gasoline station, Thursday, Aug. 6, 2026, in Greenwood Village, Colo. (AP Photo/David Zalubowski) Gas prices are displayed electronically at … more > Some Fed members had been pushing to increase rates to tame inflation, a move that would run counter to President Trump’s wishes. 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. A person loads groceries in plastic bags into their vehicle, May 18, 2026, at a grocery store in Cincinnati. (AP Photo/Joshua A. Bickel, File) A person loads groceries in plastic … more > Story Topics