Business & Finance
US inflation gauge remains at 3.7% in July amid ongoing geopolitical and trade pressures
Commerce Department figures show annual inflation holding steady above the Federal Reserve's target, while economic growth slowed in the second quarter.
The short version
- The Commerce Department reported that annual PCE inflation remained unchanged at 3.7% in July, above the Federal Reserve's 2% target.
- Core inflation, which excludes food and energy, held steady at 3.3% annually, while monthly core prices ticked up 0.2%.
- A separate government estimate showed U.S. economic growth slowed to a 1.5% annual rate in the second quarter, down from 2.1% in the first quarter.
- Federal Reserve officials remain divided over whether to maintain current interest rates or raise them, with Chair Kevin Warsh scheduled to speak Friday in Jackson Hole.
Key facts
- The Commerce Department's inflation gauge showed prices increased 3.7% in July compared to a year earlier, matching the rate recorded in June.[ABC News · Associated Press]
- Core inflation, which excludes food and energy, held at 3.3% year-over-year in July and rose 0.2% on a monthly basis.[ABC News · Associated Press]
- Gross domestic product grew at an annual rate of 1.5% in the second quarter, down from 2.1% in the first quarter.[ABC News]
- Inflation measured 2.9% in late February prior to the onset of the U.S.-Israel conflict with Iran.[ABC News · Associated Press]
- Energy prices dropped 2.7% and grocery costs fell 0.1% from June to July, while vehicle prices rose 0.4% and housing and utility costs grew 0.3%.[ABC News]
- Treasury Secretary Scott Bessent announced plans to double buybacks of 10- to 30-year bonds starting next month to address rising yields.[ABC News]
What remains uncertain
- Whether the Federal Reserve will maintain interest rates at current levels or implement rate increases to curb persistent inflation remains undecided among officials.[ABC News · Associated Press]
- The extent to which August inflation will be affected by recent increases in gas prices remains to be seen until next month's report.[ABC News · Associated Press]