The Consumer Price Index rose 3.4% year-over-year in July 2026, down from 3.5% in June, marking the second consecutive month of deceleration and landing exactly in line with market expectations. Core inflation, which excludes food and energy, dropped to 2.5% year-over-year, moving closer to the Federal Reserve’s 2% target. Shelter costs accounted for roughly two-thirds of July’s monthly gain, confirming their role as the primary stubborn factor delaying disinflation. Energy prices fell 1.5% in July, providing meaningful downward pressure on the headline figure. Inflation had peaked at 4.2% in May 2026, after hitting a low of 2.4% in January.
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