US inflation slowed last month and a measure of underlying price pressures also cooled, suggesting higher oil and gas prices from the Iran war are only having a limited impact on broader costs in the economy. This was reported by Qazaqyia.kz citing Associated Press.
Consumer prices rose 3.4% in July from a year ago, down slightly from 3.5% in June, the Labor Department said Wednesday. But inflation is still higher than before the Iran war began in February, when it was 2.4%. On a monthly basis, prices rose just 0.1% from June to July.
Wednesday's report comes as the Federal Reserve is sharply divided over whether it should hike its key interest rate to combat inflation. The Fed kept its rate unchanged, at about 3.6%, at a meeting late last month. But the vote was 9-3, with three dissenters favoring a rate hike.
Americans unexpectedly cut their spending in July as a boost from government tax refunds faded. Retail sales slipped 0.6% last month, the biggest drop since May 2025, from a revised gain of 0.2% in June, according to Commerce Department data released Friday.
There was a notable bump in spending in both April and May as Americans dipped into their tax refunds. That effect may have faded last month. Excluding sales at gas stations and at auto dealers, retail sales in July fell 0.2%. Gas prices bounced back in recent weeks in what appears to be a stalemate in the Strait of Hormuz.
Sales of previously occupied U.S. homes slowed again in July as record prices and the highest mortgage rates in a year prove to be an insurmountable hurdle for many prospective buyers. Existing home sales fell 1.7% last month from June to a seasonally adjusted annual rate of 4.06 million units, the National Association of Realtors said Tuesday. That's slightly above the 4.05 million pace economists were expecting, according to FactSet, and up 0.7% compared with last year.
Home prices continued to rise, hitting unprecedented levels for the month of July, NAR said. The U.S. median sales price increased 2% from a year earlier, to $434,100.
Wholesale inflation dropped last month as gas prices reversed some of their Iran war spike and other costs also cooled, a sign that consumer inflation could grind lower in the months ahead. The Labor Department's producer price index — which captures inflation before it reaches consumers — rose 4.7% in July from a year ago, down from a much larger 5.5% increase in June. On a monthly basis, wholesale prices were unchanged from June to July.
The figures follow the government's consumer price inflation report, released Wednesday, which also showed a modest cooling last month. Still, consumer prices have risen faster than wages for the past four months, underscoring the challenges many Americans have affording necessities such as rent and utilities. If prices continue to outpace wages, many consumers may be forced to dial back their spending in the coming months.
U.S. applications for unemployment benefits rose last week, but layoffs remain at historically healthy levels. The Labor Department reported Thursday that 209,000 people filed jobless claims last week, up from a revised 200,000 the week before and higher than the 205,000 forecasters had expected. The four-week average of applications, which smooths out week-to-week volatility, was unchanged at 199,000. The overall number of people collecting employment benefits the week that ended Aug. 1 dropped by 22,000 to 1.78 million.