Annual inflation in the United States stood at 3.4% in July, according to a government report released Wednesday, with consumer prices rising 0.1% from June to July — a deceleration for the second consecutive month following a rise in April and May. Average wages grew 3.2% over the past year, according to the Labor Department's July report, a rate slower than June's and below the current pace of inflation.
US inflation slowed to 3.4% annually in July as wages lagged and retail sales fell
Annual inflation in the United States stood at 3.4% in July, according to a government report released Wednesday, with consumer prices rising 0.1% from June to July — a deceleration for the second consecutive month following a rise in April and May. Average wages grew 3.2% over the past year, according to the Labor Department's July report, a rate slower than June's and below the current pace of inflation.
Grocery prices dipped slightly between June and July but remained 2.7% higher than a year earlier, according to federal data from the Bureau of Labor Statistics. Beef prices continued to rise, while chicken and egg prices fell. Lettuce prices also declined, which the source attributes to supermarket discounts offered amid a recent cyclosporiasis outbreak. Gasoline prices fell in July, as they did in June, but remained nearly 25% higher than a year ago, according to federal data. Average fuel prices tracked by AAA have since ticked up, the source states, owing to a lack of progress in restoring oil tanker movement through the Strait of Hormuz.
Retail sales fell 0.6% from June to July, according to a Friday report from the Commerce Department — the first monthly decline in several months. Spending dropped on electronics, autos and auto parts, and gasoline. The source attributes a 2.2% drop in online store spending partly to a timing effect: Amazon's Prime Day sales event occurred in June rather than July. Measured year-over-year, retail spending grew broadly, with restaurant and bar spending up 5% and gas station spending up 16%.
Researchers at Bank of America, analyzing debit and credit card transactions, reported this week that spending by lower-income households increased in July while spending by upper-income households edged down. Restaurant spending grew faster among lower-income consumers than among higher-income families, the report found. The Federal Reserve Bank of New York reported this week that credit card and auto loan balances grew 1.7% in late spring to early summer compared to a year ago, while student loan and mortgage debt declined. Federal researchers described delinquency rates as 'fairly stable.'
Congressional forecasters said this week they expect the federal deficit to exceed $2 trillion this year, approximately $200 billion more than projected six months ago, according to the Congressional Budget Office. The federal government's cumulative debt is approaching $40 trillion, with annual interest payments exceeding $1 trillion — more than any federal program other than Social Security, the source states. Ten-year Treasury yields hit what Bloomberg described as a nearly two-decade high this week, and the source notes that mortgage rates, which typically move with those yields, have weighed on the housing market.
The source notes that average wages grew faster than prices from approximately mid-2023 to early 2026, a period during which workers' real purchasing power improved. The current rate of wage growth at 3.2% annually falls below the 3.4% inflation rate, reversing that dynamic.
- The source does not state which specific congressional body or office issued the deficit forecast beyond describing them as 'congressional forecasters'; the publication cites a CBO link but does not name the CBO in the article text.
- The source does not state the precise methodology or income thresholds Bank of America used to define 'lower-income' and 'upper-income' households.
- The source does not state the current average mortgage rate or specify how much mortgage rates have risen.
- The source does not identify the specific federal report released Wednesday beyond describing it as a government report on consumer prices; context implies it is the Consumer Price Index from the Bureau of Labor Statistics.
- The source does not state the size of Bank of America's transaction dataset or whether the findings are peer-reviewed.
- The source does not provide the federal government's response or commentary on the projected $2 trillion deficit figure.