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Key inflation gauge remains elevated during Iran conflict and ongoing US trade fights
AP News • • general
Key Points:
- Inflation remained steady at 3.7% in July compared to a year earlier, unchanged from June, indicating ongoing struggles with higher costs for many Americans and remaining above the Federal Reserve's 2% target.
- Core inflation, which excludes food and energy, also held steady at 3.3% in July, reflecting persistent price pressures despite some recent declines prior to tariff impositions in 2025.
- The U.S. economy grew at a slower 1.5% annual rate in the April-June quarter, down from 2.1% in the first quarter, with consumer spending stable but cautious amid high inflation.
- Gas and energy prices fell 2.7% from June to July, but car prices and housing costs increased, and gas prices have rebounded recently, potentially pushing inflation higher in the coming months.
- Federal Reserve officials remain divided on whether to raise interest rates, with new Fed Chair Kevin Warsh's upcoming speech closely watched for guidance, as persistent inflation has contributed to higher long-term borrowing costs.
