Key inflation gauge remains elevated during Iran war and ongoing US trade fights
Summary
Inflation in the United States stayed high in July, with prices about 3.7% higher than a year before, well above the Federal Reserve's 2% goal. Rising costs are linked to the ongoing war in Iran, higher gas prices, President Donald Trump's threats of new tariffs, and spending on technology like AI.Key Facts
- Inflation was 3.7% higher in July 2025 compared to July 2024.
- Inflation increased since the Iran war started in February 2025, when it was 2.9%.
- The Federal Reserve aims to keep inflation near 2%.
- Gas prices rose due to the Iran war, contributing to higher overall prices.
- President Donald Trump has threatened new tariffs on Canada and China.
- Spending on AI technology has raised costs of computers, gaming consoles, and semiconductors.
- Core inflation (excluding food and energy) stayed at 3.3% in July.
- The Federal Reserve is divided on whether to raise interest rates to control inflation, with a key speech from Fed Chair Kevin Warsh expected soon.
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