US inflation eases to 3.4% in July as energy prices retreat
U.S. annual consumer inflation slowed to 3.4% in July 2026, while core inflation was 2.5% and energy costs remained sharply higher than a year earlier.
In short
- U.S.
- annual consumer inflation slowed to 3.4% in July 2026, while core inflation was 2.5% and energy costs remained sharply higher than a year earlier.
Annual consumer inflation in the United States eased to 3.4% in July 2026, offering some relief after price growth reached a three-year high of 4.2% in May.
Core inflation, which excludes volatile food and energy prices, stood at 2.5% from a year earlier and rose 0.2% from June. Food and services prices, including shelter, transportation and medical care, were each about 3% higher year on year, while grocery prices declined slightly.
Energy prices fell during July, but the improvement was limited. One report put the monthly decline in the energy index at 1.5%, while energy costs remained 14.7% above their level a year earlier. Gasoline prices also fell during the month but were still substantially higher than before the war with Iran disrupted energy markets.
The data arrive alongside signs of weakness in the labour market. U.S. employers lost 23,000 jobs in July, and earlier job-growth estimates for May and June were revised down by a combined 103,000. Inflation-adjusted hourly wages declined 0.2%.
The Federal Reserve is balancing persistent inflation against softer employment as it considers its next interest-rate decision. Policymakers kept rates unchanged at their July meeting, and another round of inflation and jobs figures is due before the central bank meets again in September.
