US Inflation Slows to 3.4% in July

According to data from the Bureau of Labor Statistics, inflation in the United States continued to slow in July, reaching an annual rate of 3.4%. The month-over-month increase in prices was just 0.1%, with core inflation—excluding volatile energy and food prices—rising by 0.2%. The energy sector saw a decline of 1.5%, with gasoline prices dropping by 2.9%. Meanwhile, housing costs increased by only 0.1%, the smallest rise in recent months.

Despite energy prices remaining elevated at 14.7%, the overall moderation in inflation suggests easing pressure on the Federal Reserve to raise interest rates. Market participants responded positively, with traders increasing the probability of maintaining current rates in September to approximately 62–65%. Equity markets and bond yields moved higher and lower respectively, reflecting investor optimism about the inflation trajectory and monetary policy outlook.