Inflation clearly remained elevated in July, but we think that on balance the PCE data does not shift the dial significantly for September’s decision. It may be enough to push some into the hiking camp. Governor Lisa Cook was explicit at the start of August that PCE inflation of 3.7 per cent in June was too high, where it remained in July.

Despite an increase in disposable income, personal consumption expenditures rose just 0.2% last month compared with a 0.4% gain in June.

The 12-month rate of inflation as of July 2026 is 3.4%, according to the Bureau of Labor Statistics (BLS). Energy inflation spiked to 14.7% as the status of the Strait of Hormuz remains uncertain. Core inflation, which excludes energy and food, was 2.5%.

Annual U.S. inflation unexpectedly held steady in July well above the Federal Reserve's 2% target for the 65th straight month, and the pause in the decline from a recent Iran-war induced peak is likely to add to the central ​bank's tense debate over whether interest rates should be lifted or held steady.

CNN's John Berman called out Rep. Pete Sessions (R-TX) after he claimed President Donald Trump has lowered inflation rates during his second term.