US inflation remains sticky in July

US inflation remained unchanged at 3.7% year-over-year in July, according to the Bureau of Economic Analysis. This figure, which has been above the Federal Reserve's 2% target for 65 months, was higher than economists' forecasts. The month-over-month increase was 0.2%, also exceeding expectations. Core PCE, excluding energy and food, held steady at 3.3% annually and rose to 0.2% monthly. This persistent inflation, exacerbated by rising energy prices following attacks on Iran, has increased the likelihood of the Federal Reserve raising interest rates at its upcoming meeting.

Inflation, as measured by a key gauge watched by the Federal Reserve, remained elevated in July, rising 3.7% year-over-year, unchanged from June. This persistent inflation is above the Fed's 2% target and has worsened since the Iran war began in February. Factors contributing to high prices include the ongoing Iran war impacting gas prices, President Trump's threatened tariffs on Canada and China, and increased spending on AI infrastructure. The Federal Reserve is divided on whether to hold interest rates steady or raise them to combat inflation. New Fed Chair Kevin Warsh's upcoming speech is highly anticipated for insights into the Fed's next steps. Core inflation, excluding food and energy, was also unchanged at 3.3%.