Inflation moderates to 3.4% annually in July, in line with market expectations

The rise in consumer prices moderated slightly in July and stood at 3.4% year-over-year, according to the Consumer Price Index (CPI) released on Wednesday by the Department of Labor. The figure was in line with market expectations.

The moderation in inflation occurred amid falling gas prices, driven by the temporary ceasefire in the Middle East between June and early July, before the conflict intensified again.

Housing and food drive monthly increase

On a monthly basis, the CPI rose 0.1% in July, following a 0.4% decline in June. The housing index increased by 0.1% and accounted for approximately two-thirds of the monthly increase.

Meanwhile, food prices also rose by 0.1%, driven by a 0.3% increase in eating out. In contrast, the energy index fell by 1.5%.

Core inflation falls to 2.5% year-over-year

Core inflation—which excludes food and energy—rose by 0.2% for the month, after remaining stable in June, and stood at 2.5% year-over-year, down one-tenth of a percentage point from the previous month. Over the past year, the energy index rose by 14.7%, and the food index by 3.0%.

Among the components that rose the most in July were medical care, airline tickets, communications, education, and leisure. Conversely, auto insurance was one of the components that fell the most.