US Inflation Eases to 3.4% in July as Shelter Costs Persist

U.S. inflation eased in July, with the Consumer Price Index rising 3.4% year-over-year, down from 3.5% in June, according to data released by the Bureau of Labor Statistics on August 12, 2026. The monthly increase was a modest 0.1% on a seasonally adjusted basis, landing in line with economist expectations. Core inflation, which strips out volatile food and energy prices, also showed signs of cooling, rising 2.5% annually and 0.2% for the month.

The report marks the second consecutive month of deceleration after inflation peaked at 4.2% in May, a surge driven by an energy price shock linked to Middle East tensions and supply disruptions. While the overall trend is downward, the data presents a mixed picture for the Federal Reserve as it weighs its next policy move. The central bank kept its benchmark interest rate unchanged at 3.50% to 3.75% at its late July meeting, though the decision was not unanimous, with three policymakers dissenting in favor of a rate hike.

Shelter costs remained a stubborn component of inflation, rising 0.1% for the month but accounting for roughly two-thirds of the overall CPI increase. Housing costs, which make up about a third of the index, tend to...