US consumer prices rise slightly in July as gas prices decline

Inflation in the United States is still running above where the Federal Reserve wants it, but the July 2026 Consumer Price Index report offered something close to a sigh of relief. The headline CPI rose just 0.1% from June to July, a notable slowdown after a sharper 0.4% decline the prior month, and the year-over-year reading edged down to 3.4% from 3.5% in June. What actually moved prices Gasoline prices fell 2.9% over the month, dragging the broader energy index down 1.5%. On the other side of the ledger, shelter costs nudged up 0.1% for the month. Housing carries an outsized weight in the CPI calculation, and the BLS noted that shelter accounted for roughly two-thirds of the total monthly increase in the all-items index. Food prices added a modest 0.1% on the month and are now 3.0% higher than a year ago. Core CPI, the measure that strips out food and energy, rose 0.2% month-over-month and 2.5% year-over-year. That annual core reading came down from 2.6% previously. Why the Fed is watching closely The July data broadly matched what economists had anticipated. The core reading at 2.5% annually is still meaningfully above the Fed’s 2% target. The direction of travel, with core inf...