What did U.S. inflation data show in July 2026?

The Consumer Price Index rose 0.1 percent in July after falling 0.4 percent in June. Over the 12 months through July, CPI increased 3.4 percent, while core CPI rose 0.2 percent on the month and 2.5 percent on the year.

Why could the July 2026 U.S. CPI report affect Federal Reserve rate expectations?

The report showed inflation rising only slightly, which could weaken the argument for an interest rate increase next month. The Fed was still waiting for August CPI and employment reports before its Sept. 15-16 meeting.

How did markets and economists react to the July 2026 inflation reading?

Reuters polled economists who had forecast a 0.1 percent rise in CPI and a 0.2 percent increase in core inflation. Before the report, CME’s FedWatch tool showed markets saw about a 46 percent chance of a rate hike at the Fed’s September meeting.

US consumer prices increase as expected in July

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Summary

U.S. consumer prices increased 0.1 percent in July in Washington, while annual inflation eased to 3.4 percent, according to the Labor Department’s Bureau of Labor Statistics. The reading could weaken the case for a Federal Reserve rate hike next month. Core CPI rose 0.2 percent on the month and 2.5 percent from a year earlier.

Key Facts

The Consumer Price Index fell 0.4 percent in June, its first decline in six years, before rising 0.1 percent in July.
In the 12 months through July, CPI increased 3.4 percent, down from 3.5 percent in June.
Core CPI, which excludes food and energy, rose 0.2 percent in July and 2.5 percent over 12 months.
Economists polled by Reuters had expected CPI to rebound 0.1 percent and core inflation to rise 0.2 percent in July.
CME’s FedWatch tool showed markets had priced in roughly a 46 percent chance of a rate hike at the Fed’s Sept. 15-16 policy meeting before the CPI report.

By Reuters

Published Aug 12, 2026 9:44 pm KST

Traders work on the floor of the New York Stock Exchange in New York, Wednesday. EPA-Yonhap

WASHINGTON — U.S. consumer prices increased slightly in July, potentially weakening the argument for an interest rate increase from the Federal Reserve next month.

The Consumer Price Index edged up 0.1 percent last month after dropping 0.4 percent in June, which was the first decline in six years, the Labor Department's Bureau of Labor Statistics said on Wednesday.

In the 12 months through July, the CPI advanced 3.4 percent after rising 3.5 percent in June. Excluding the volatile food and energy components, the CPI gained 0.2 percent last month after being unchanged in June. The so-called core CPI increased 2.5 percent in the 12 months through July after climbing 2.6 percent in June.

Economists polled by Reuters had forecast the CPI rebounding 0.1 percent and core inflation rising 0.2 percent over the month.

The U.S. central bank tracks the Personal Consumption Expenditures price indexes for its 2 percent inflation target. The CPI report followed news last week of surprise job losses last month. Prior to the CPI report, financial markets saw a roughly 46 percent chance of a rate hike at the Fed's September 15-16 policy meeting, CME's FedWatch tool showed.

Policymakers will still get August's CPI and employment reports before that meeting. Economists expect the pace of consumer price increases to pick up in August, reflecting the recent increase in oil prices. Job growth is also expected to rebound as seasonal distortions fade. The Fed last month left its benchmark overnight interest rate in the 3.5 percent to 3.75 percent range.

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