US July CPI Shows Inflation Cooling but Still Above Fed Target

The U.S. consumer price index showed inflation cooling slightly in July but remaining well above the Federal Reserve's target, according to data released Wednesday by the Bureau of Labor Statistics. The report, which arrived at a critical moment for monetary policy, indicated that while the pace of price increases has slowed, the central bank faces a persistent inflation problem complicated by volatile energy costs and a weakening labor market.

The headline CPI rose 0.1% on a monthly basis and increased 3.4% compared to July 2025. This marked a modest deceleration from June's 3.5% annual rate. Core prices, which exclude volatile food and energy to better gauge underlying trends, rose 0.2% for the month and were up 2.5% year-over-year, down from 2.6% in June. The figures were broadly in line with economists' forecasts and validated a slow disinflationary trend.

A significant factor in the monthly reading was a 1.5% decline in energy prices, which followed a steeper 5.7% drop in June. Gasoline prices fell 2.9% for the month but remained 24.6% higher than a year ago. The shelter index, which carries heavy weight in the CPI calculation, rose just 0.1% for its smallest monthly...