US inflation eases to 3.4% but prices remain high amid global conflicts

The annual inflation rate in the United States slightly decreased in July 2026, reaching 3.4% after registering 3.5% in June. This moderation was generally in line with economists' expectations and marked a continued, albeit slow, easing of price pressures.

Specific sectors saw varied movements, with the overall energy index declining 1.5% in July, including a 2.9% drop in gasoline prices for the month. However, energy costs remained substantially higher than a year ago, reflecting a 14.7% increase. Food inflation remained steady at an annual rate of 3%, while shelter costs also showed a slight cooling, increasing by 3.2% over the past year.

Despite some relief in monthly energy prices, overall consumer prices continued to be elevated, remaining above levels seen before the conflict involving Iran began in early 2026. The ongoing global conflicts, particularly the war with Iran, have contributed to persistent high prices, largely by impacting the global oil market and causing significant volatility in energy costs. Core inflation, which excludes volatile food and energy, also cooled to 2.5% in July, indicating that the broader economy might not be seeing a widespread impact from the higher energy prices.