Consumer Prices Rise, Annual Inflation Eases
In July, consumer prices increased 0.1% from June and 3.4% over the year, down from the 3.5% annual rise in June. Core CPI, which excludes more volatile energy and food prices, rose 0.2% in July and 2.5% over the year, down from the 2.6% 12-month growth the prior month.
Energy costs declined 1.5% over the month in July, after falling 5.7% in June. Over the year, energy costs climbed 14.7%, after jumping 15.7% year-over-year in June. Within the energy index, gasoline prices decreased 2.9% but rose 24.6% over the year, while fuel oil prices stepped down 1.7% month-over-month but surged 39.1% year-over-year. Meanwhile, electricity prices inched up 0.1% in July and rose 4.2% from July 2025, while natural gas increased 0.7% over the month and 4.3% over the year.
In July, food prices edged up 0.1% over the month and increased 3.0% over the year, unchanged from the 3.0% year-over-year advance in June. Prices for food at home decreased 0.1% from June but rose 2.7% from July 2025, while prices for food away from home moved up 0.3% month-over-month and 3.4% year-over-year. Of the different food groups, coffee, beef and veal and fish and seafood rose at the fastest pace, climbing 10.3%, 9.4% and 7.0%, respectively.
The shelter index increased 0.1% from June and 3.2% over the year, down slightly from the 3.3% annual gain in June. Meanwhile, prices for used cars and trucks stepped up 0.4% over the month but declined 1.9% over the year, while new vehicle prices edged up 0.1% over the month and rose 0.5% from July 2025. At the same time, prices for motor vehicle maintenance and repair grew 0.6% month-over-month and 6.6% year-over-year.
The headline inflation rate is still well above the Federal Reserve’s target of 2.0% and remains above 2025 lows, with increased pressure from the war in the Middle East. Federal Reserve officials held their interest rate target steady at their July meeting, and markets anticipate that the Federal Open Market Committee will keep its interest rate target unchanged again at the next meeting in September.
