Inflation increased 0.1% for the month of July, but the annual inflation rate slowed to 3.4%, according to the U.S. Consumer Price Index report released on Wednesday.
The U.S. Bureau of Labor Statistics said that the monthly increase in shelter costs (+0.1%) accounted for roughly two-thirds of July’s all-items increase. Shelter costs have increased 3.2% since July of 2025.
The 3.4% annual inflation rate is a slight decline from the 3.5% rate posted for the 12-month period that ended in June. However, it remains a full percentage point above the 2.4% annual inflation rate in the U.S. before the Iran war began in late February and disrupted oil shipments through the Strait of Hormuz.
Although gasoline prices fell 2.9% between June and July, they remain 24.7% higher than they were in July 2025. Fuel oil is up 39.1% on an annual basis. For the same 12-month period, electricity was up 4.2% and household natural gas costs increased 4.3%.
The so-called core index that excludes more volatile food and energy prices rose 0.2% in July and is up 2.5% since July 2025. Airline fares increased 2.2% over the month and are up 25.5% since July of 2025, driven by the spike in fuel prices since the war began.
Other core index items that increased during the month of July include shelter (+0.1%), medical care (+0.4%), education (+0.5%), recreation (+0.2%) used cars and trucks (+0.4%), new vehicles (+0.1%) and apparel (+0.1%). Conversely, motor vehicle insurance decreased 0.3% in July after falling 2.0% in June.
Energy costs decreased 1.5% on a monthly basis in July but are up 14.7% overall since July 2025. Food prices increased 0.1% in July after rising 0.2% in June. The food index is up 3.0% since July 2025.
