This story about the July 2026 CPI inflation report will be updated with further details.
Inflation cooled slightly in July even as the pace of consumer price growth from a year ago remains elevated, as the Federal Reserve considers a potential interest rate hike next month.
The Bureau of Labor Statistics (BLS) said on Wednesday that the consumer price index (CPI) – a broad measure of how much everyday goods like gasoline, groceries and rent cost – increased 0.1% on a monthly basis and is up 3.4% from a year ago.
Expectations vs. reality
Those figures were in line with the estimates of economists polled by LSEG. The monthly data follows a reading of negative 0.4% in June, while the annual figure is slightly cooler than last month’s 3.5% reading.
So-called core prices, which exclude volatile measurements of gasoline and groceries to better assess price growth trends, were up 0.2% from a month ago and are 2.5% higher year over year. The monthly figure represents a slight uptick after price growth was flat in June, while the annual figure is slightly cooler than last month’s 2.6% reading.
FED’S HAMMACK SAYS MULTIPLE RATE HIKES MAY BE NEEDED TO TAME INFLATION
The cost of living breakdown
High inflation has created severe financial pressures in recent years for most U.S. households, which are forced to pay more for everyday necessities like food and rent. Price hikes are particularly difficult for lower-income Americans, because they tend to spend more of their already-stretched paychecks on necessities and have less flexibility to save.
Energy prices fell 1.5% on a monthly basis in July, but remain up 14.7% from a year ago. That follows a decline of 5.7% in June, when energy prices were easing quickly.
Gasoline prices declined 2.9% on a monthly basis in July but are 24.6% higher than a year ago. Electricity costs rose 0.1% on a monthly basis and are up 4.2% over the last year.
Food prices increased 0.1% from a month ago and are up 3% compared with last year. The food at home index declined 0.1% in July and is up 2.7% from a year ago, while the food away from home index rose 0.3% in July and is 3.4% higher than last year.
The meats, poultry and fish index declined 0.7% on a monthly basis and is up 4.5% from a year ago. Much of that increase has been driven by beef and veal prices, which are up 9.4% in the last year after a 0.8% decline in July. Egg prices fell 0.5% on a monthly basis and are down 25.7% from a year ago as flocks continue to stabilize after an avian flu outbreak.
The fruits and vegetables index fell 0.1% for the month and is up 5.1% from a year ago. Lettuce prices fell 16.4% in July amid a Cyclospora outbreak, but remain up 7.5% from a year ago.
Housing prices rose 0.1% in July, which the BLS noted was responsible for about two-thirds of the total monthly increase, while the shelter index is up 3.2% from a year ago. Tenants’ and household insurance prices decreased 0.1% in July but are up 4.8% from a year ago.
Transportation services prices rose 0.3% in July and are up 2.9% from a year ago. Airline fares rose 2.2% in July and are up 25.5% over the last year.
What experts are saying
What does it mean for the Fed and interest rates?
What does it mean for the market?
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