Inflation’s stubborn streak is finally showing some cracks. The Labor Department’s July CPI showed headline inflation easing slightly to 3.4% from June, while core inflation came in at 2.5% annually. The softer print gives the Fed its clearest sign in months that price pressures are starting to ease.
- Gas prices fell 2.9% from June to July as Iran war ceasefire optimism briefly cooled oil markets, though gas still sits ~$1 above pre-war levels at $4 a gallon.
- Computer software and accessories surged 21.2% year-over-year, driven by a global chip shortage fueled by AI data center buildout.
The decision ahead: Traders now see a 58% chance the Fed holds rates steady in September, as softer shelter costs helped ease broader inflation pressures. The relief wasn’t universal, with airfares and used-car prices still moving higher. Still, State Street economist Simona Mocuta said the latest data is enough to take a September rate hike off the table.