US inflation remains sticky in July
Summary
Inflation in the United States stayed high in July, with prices rising 3.7% over the past year, well above the Federal Reserve’s 2% target. This may lead the Fed to raise interest rates in September to try to control inflation.Key Facts
- Inflation measured by the Personal Consumption Expenditures (PCE) Price Index was 3.7% in the 12 months through July, unchanged from June.
- The core PCE, which excludes energy and food prices, rose 3.3% year-over-year and 0.2% month-over-month in July.
- The Fed may increase interest rates at its September 15-16 meeting, with about a 42% chance according to market expectations.
- Inflation has increased since February partly due to the conflict between the US/Israel and Iran, which affected oil supplies and prices.
- Consumer incomes adjusted for inflation rose only 0.2% compared with a year ago after several months of decline.
- Gas prices rose again to an average of $4.10 per gallon nationally, which could push inflation higher in August.
- US-Canada trade talks broke down, leading to new tariffs on $20 billion of Canadian goods and possibly causing further price increases.
- Many US consumers remain worried about the economy due to rising prices affecting their finances.
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