By Ethan Faverino |
The Joint Economic Committee released its Monthly Inflation Update for July 2026, showing that consumer prices continued to rise, while real earnings remained mostly steady during the month.
According to the report, the headline Consumer Price Index for All Urban Consumers (CPI-U) increased 0.07% from June to July and rose 3.36% over the previous year.
Core CPI, which excludes food and energy prices, increased 0.22% in July and was up 2.48% from July 2025.
Energy prices declined 1.48% in July but remained significantly higher than a year earlier, with energy price inflation increasing 14.73% over the past 12 months. Food prices increased 0.08% during July and were up 2.98% compared with July 2025.
Inflation also varied across the country. Annual headline CPI inflation was highest in the Northeast at 4.1%, followed by the Midwest at 3.5%. The South recorded annual inflation of 3.2%, while the West had the lowest rate among the four regions at 3.0%.
The inflation report comes less than a week after a disappointing jobs report that showed the U.S. economy unexpectedly lost 23,000 jobs in July. Economists had expected employers to add jobs during the month.
The Bureau of Labor Statistics also sharply revised employment gains for May and June downward by a combined 103,000 jobs, providing a weaker picture of the labor market than previously reported.
The July employment report also showed an unemployment rate of 4.1%, down slightly from June. However, the decline was accompanied by a reduction in labor-force participation, while employment fell in areas including local government, education, and retail trade sectors. Healthcare continued to trend upward.
The combination of persistent inflation and signs of a weakening labor market leaves the Federal Reserve facing a difficult balancing act as it considers its next interest-rate decision.
The Federal Reserve previously voted 9-3 to maintain the benchmark interest rate, and the latest inflation and employment data could further reduce pressure on the central bank to raise rates at its September meeting.
While inflation remains above the Fed’s 2% target, the weaker-than-expected jobs numbers and downward revisions to previous employment gains could give policymakers additional reason to exercise caution.
The Federal Reserve will receive another round of inflation and employment data before its September meeting, giving policymakers a final set of economic data to consider as they weigh continued price pressures against growing signs of a cooling labor market.
The July report also examined changes in workers’ real earnings, which account for the effects of inflation. For all employees on private, non-farm payrolls, real average weekly earnings decreased 0.02% from June to July, while real average hourly earnings declined 0.09%.
Among production and nonsupervisory employees on private non-farm payrolls, real average weekly earnings increased 0.06% during the month. Real average hourly earnings for the group remained unchanged, with a net change of 0.00%.
Ethan Faverino is a reporter for AZ Free News. You can send him news tips using this link.
