US inflation slows to 3.4% in July

US consumer inflation slowed to 3.4% year on year in July, while the consumer price index rose 0.1% from a month earlier, US Bureau of Labor Statistics data showed Wednesday.

The annual rate was down from 3.5% in June and matched expectations from economists polled by Dow Jones Newswires and The Wall Street Journal. The reading remained above the Federal Reserve's long-term 2% target.

Core CPI, which excludes volatile food and energy prices, rose 2.5% from a year earlier.

Energy costs continued to pressure households. Gasoline prices were up 24.6% from a year earlier, while fuel oil was up 39.1%. The overall energy index, however, was 1.5% lower than a month earlier.

Inflation was 2.4% in February before rising to a three-year high of 4.2% in May, during the US-Iran war and disruption around the Strait of Hormuz. Talks to end the war were continuing, according to the supplied AFP account.

July's data offered some relief for households in groceries, where prices fell 0.1% over the month and three of the six major grocery food group indexes declined.

Democratic Senator Elizabeth Warren said inflation was “still too high” and said prices had risen 4.4% since Trump took office, with paychecks not keeping up. White House spokesperson Kush Desai said the slowing inflation figures were “further proof” that Trump's long-term agenda was delivering.

Fresh official data last week showed wage growth at 3.2% year on year, lagging inflation.

Jeffrey Roach, chief economist for LPL Financial, said the debate at the Fed's September rate-setting meeting was expected to be lively because of a tight labour market and an unclear inflation picture. Bill Adams, chief US economist at Fifth Third Commercial Bank, said July's CPI data kept a narrow path open for the Fed to hold rates steady in September.