Annual inflation in the United States eased slightly to 3.4% in the 12 months to July 2026, down from 3.5% in June, according to figures released by the Bureau of Labor Statistics on 12 August 2026. The modest decline was driven largely by cooling food prices and a drop in energy costs, offering households some relief after months of elevated price pressure.
On a monthly basis, prices climbed 0.1% in July, with the increase attributed mainly to higher housing costs. The Bureau of Labor Statistics noted that even small shifts in rent can have an outsized effect on the headline inflation figure, since housing accounts for a substantial portion of typical household budgets.
What happened to food and energy prices?
Food prices edged up only slightly in July, rising at a slower pace than in June, while energy costs fell outright, providing consumers with some breathing room at the till and the pump.
What is happening with core inflation?
Stripping out volatile food and energy categories, so-called core prices rose 0.2% in July after remaining flat the previous month. Medical care and airline tickets both became modestly more expensive, while car insurance costs declined, according to the Bureau of Labor Statistics.
How does this compare with recent months?
The latest reading continues a broader cooling trend seen since the spring. Inflation had surged to 4.2% in May, the fastest pace in three years, before easing to 3.5% in June as gasoline prices tumbled. According to , core CPI in June stood at 2.6% year-on-year and was unchanged month over month, while CNBC reported that overall prices actually fell 0.4% that month, the steepest monthly drop since April 2020. Separately, PNC noted that so-called supercore inflation contracted 0.1% month on month in June, driven in part by falling gasoline prices.
This follows an earlier easing in January, when annual inflation slowed to 2.4% amid falling energy and used car prices, before accelerating again through the spring.
Were economists expecting this figure?
Yes. Ahead of the release, private forecasters had already anticipated further cooling, with estimates clustering between 3.32% and 3.4% year on year, according to The Motley Fool. Market data compiled by Trading Economics similarly projected an annual rate of 3.4% and a monthly rise of 0.1%, both of which matched the official outcome.
What happens next?
The Bureau of Labor Statistics has scheduled its next Consumer Price Index update for release on 12 August at 8:30 a.m. ET, covering the 12 months ending in July, according to USInflationCalculator.com. Markets will be watching closely to see whether the cooling trend continues or whether housing and core costs begin to reassert upward pressure.
Key Facts
- Annual US inflation eased to 3.4% in July 2026, down from 3.5% in June.
- Monthly inflation rose 0.1% in July, driven mainly by higher housing costs.
- Core inflation (excluding food and energy) rose 0.2% in July after being flat in June.
- Medical care and airline fares rose; car insurance costs fell.
- The next CPI release is scheduled for 12 August at 8:30 a.m. ET.
