US inflation fell slightly in July thanks to energy and food prices

Consumer prices in the United States rose 3,4% year-over-year in July, compared to 3,5% in June, according to data released by the Bureau of Labor Statistics. This modest slowdown leaves the Federal Reserve facing difficult choices regarding interest rates.

Over the course of a month, price increases reached only 0,1% in July, driven primarily by housing costs. Rent represents a significant portion of American household budgets, meaning that even slight fluctuations are enough to impact the overall index.

Energy remains a volatile variable. Gasoline prices fell by 2,9% between June and July, but are still up 24,6% year-over-year, due to ongoing tensions in the Middle East. Food prices, meanwhile, rose more slowly than in June, offering consumers limited respite.

Excluding food and energy, prices rose 0,2% over the month, after remaining stable in June. Medical care and airfares increased slightly, while car insurance continued to fall.

These figures do not mean that prices are falling; they only indicate that their increase is slowing. President Donald Trump also pointed out that inflation remains too high for many families, citing rent and food costs as evidence that the cost of living remains a major concern.

The new Federal Reserve chairman, Kevin Warsh, reaffirmed that the central bank's priority is to "keep inflation on a downward trajectory" without causing unnecessary shocks to the economy. At a recent press briefing, he cautioned that the Fed does not have a "magic wand" to erase years of exceeding its inflation target and that it must remain patient. The official target remains at 2%.

Financial markets greeted the data with little reaction, with stock indices closing virtually unchanged, the figures broadly in line with expectations. Chris Zaccarelli, chief investment officer at Northlight Asset Management, deemed the results unsurprising and ruled out any risk of a "reacceleration" of inflation. He added that, combined with recent employment data—July saw net job losses—these figures "give the Fed more time to wait."

Jeffrey Roach, chief economist at LPL Financial, sees the decline in energy prices as a factor that "helped to ease inflationary pressures this month" and, in his view, confirms a "genuine deceleration trajectory." Bill Adams, chief US economist at Fifth Third Commercial Bank, believes the report "keeps a narrow path open" allowing the Fed to leave interest rates unchanged in September.