U.S. Inflation Slows to 3.4% in July Amid Cooling Trend

U.S. inflation slowed for the second consecutive month in July, with consumer prices rising at an annual rate of 3.4 percent, down from 3.5 percent in June, according to a Labor Department report released Wednesday. The data suggests that the economic impact of higher energy costs stemming from the ongoing war in Iran has been more limited than initially feared, though prices remain elevated compared to pre-conflict levels.

The Consumer Price Index showed a modest 0.1 percent increase from June to July, following a 0.4 percent decline the previous month. Core inflation, which excludes volatile food and energy prices, also cooled to 2.5 percent year-over-year, matching a post-pandemic low last seen in January and February before the conflict began. On a monthly basis, core prices rose 0.2 percent, a pace that, if sustained, could bring inflation closer to the Federal Reserve's 2 percent target over time.

Energy costs, which have been a primary driver of inflation since the war disrupted global oil supplies, showed mixed signals. While energy prices were up 14.7 percent compared to a year ago, gasoline prices actually fell 2.9 percent from June to July. However, gas remains...