US inflation eases to 3.4% in July, retail spending drops 0.6%

Inflation in the United States slowed to 3.4% in July from 3.5% in June, the Labor Department reported. The Economic Times, citing The Associated Press, said core price pressures tempered, suggesting higher oil and gas prices due to the Iran war had limited impact on the broader economy. On a monthly basis, prices rose just 0.1% from June to July. However, inflation remains above the 2.4% level before the Iran war began in February.

Retail spending dropped 0.6% in July, the biggest fall since May 2025. The Commerce Department data cited by AP showed the decline follows a revised 0.2% gain in June. Americans had unexpectedly reduced spending as the boost from government tax refunds faded. Sales excluding gas stations and auto dealers fell 0.2%.

Existing-home sales dipped 1.7% in July to a seasonally adjusted annual rate of 4.06 million units. The National Association of Realtors said median home prices hit a record $434,100, up 2% year-over-year. Wholesale inflation eased to 4.7% year-over-year in July from 5.5% in June. Weekly jobless claims rose to 209,000 but remain near historically low levels. The Federal Reserve kept its key rate unchanged at 3.6% last month, with a 9-3 vote.