Newzinflation 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.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.The modest decline could ease pressure on the inflation-fighters at the Federal Reserve to raise their key interest rate to combat rising costs.
Yet prices are still rising more quickly than average wages, underscoring the struggle many Americans have had with more expensive groceries, gas, and health care, trends that have taken on a high profile in the fast-approaching midterm elections.Excluding the volatile food and energy categories, core inflation rose also slipped to 2.5% in July from a year ago, down from 2.6% in June. July's figure matches a post-pandemic low reached in January and February, before the Iran war.Core prices rose 0.2% from June to July. Monthly increases at about 0.2% would be low enough over time to bring inflation closer to the Fed’s 2% goal.Still, oil prices remain elevated and gas prices rose in late July and August, suggesting overall inflation could accelerate next month.
On Wednesday, gas averaged $4.04 a gallon nationwide, 16 cents higher than a month ago, according to the motor club AAA.Inflation has been pushed higher by a series of shocks to the economy, including President Donald Trump’s tariffs imposed last spring, higher gas prices stemming from the Iran war, and a surge in investment in artificial intelligence infrastructure that has boosted computer chip prices. The key question for the inflation-fighters at the Federal Reserve — not to mention for consumers struggling with high gas and grocery prices — is how quickly those one-time effects will fade or whether they will lead to persistently rising prices.Wednesday’s figures could bolster officials at the Federal Reserve who believe the central bank can leave its key rate on hold at about 3.6% while inflation steadily declines on its own as those temporary factors fade.Overall, price increases have stayed above the Fed's 2% target for more than five years, suggesting that more… futures are pointing higher before the release of key inflation data for July that could provide a better idea of where prices are heading.Futures for the S&P 500 gained 0.3% Wednesday and futures for the Dow Jones Industrial Average edged up 0.1%.
Nasdaq futures gained 0.7%.Rising costs are being closely watched by the Federal Reserve as well as Republicans facing tough midterm elections and millions of Americans struggling with higher prices for everything from groceries to gasoline. Economists expect new data to show to show inflation slipped to 3.4% in July from 3.5% in June.Cooler inflation could relieve pressure on the Fed to raise interest rates. Higher rates could curb inflation also would drag on the overall U.S.
economy by making it more expensive for households and businesses to borrow money. Higher rates also would undercut prices for stocks and other investments.Shares of cloud computing company CoreWeave surged more than 18% and Super Micro Computer's stock jumped nearly 9% before the market opened on strong quarterly results. CoreWeave more than doubled its revenue as customer demand accelerated in the second quarter.
The strong earnings gave a boost to other companies involved in building the physical infrastructure of artificial intelligence data centers including Coherent Corp., Lumentum Holdings and Marvell Technology.Oil prices are essentially flat Wednesday but sharply higher this week with the Strait of Hormuz, through which a fifth of the global oil supply runs, effectively shut down as fighting in Iran continues.The price of a barrel of Brent crude, the international standard, rose 0.19% to $89.08 early Wednesday. benchmark crude oil ticked up 0.4% to $83.53.U.S. gasoline prices also edged 2 cents higher over night to a national average of $4.04 per gallon, according to motor club AAA.
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