July Core CPI Slows to 2.5% as Fed Weighs Its September Decision

Consumer prices rose 0.1 percent in July and 3.4 percent over 12 months. Core inflation slowed to 2.5 percent, its softest annual reading of the past year.

Consumer prices rose 0.1 percent in July and 3.4 percent over 12 months. Core inflation slowed to 2.5 percent, its softest annual reading of the past year.

Treasury sold $58 billion of three-year notes at a 4.291 percent high yield on August 11, the highest since February 2025, yet demand was the strongest in nine months.

Households expect 3.6% inflation over the next year, the New York Fed's July survey shows, with three-year and five-year readings flat ahead of Wednesday's CPI report.

Treasury data through July 31 shows the federal government paid $1.170 trillion to service the national debt in fiscal 2026, up 15 percent with two months left.

U.S. employers cut 23,000 jobs in July and revisions erased 103,000 more from May and June, pushing September Fed hold odds to about 60 percent. Prime holds at 6.75 percent.

The Fed held $524.9 billion of Treasury bills on August 5, up $329.4 billion since balance sheet runoff ended, while reserve balances stalled near $3 trillion.

Treasury will auction $125 billion of 3-year, 10-year and 30-year securities on August 11 to 13, holding coupon sizes flat as Q3 borrowing climbs to $739 billion.

U.S. public debt reached $39.84 trillion on July 30, 2026, just $158.9 billion below $40 trillion, as the average interest rate on the debt climbed to 3.41 percent.

U.S. labor costs rose 0.9% in the second quarter of 2026, above forecasts, keeping wage-driven inflation in play as the Fed holds and the prime rate stays at 6.75%.

June core PCE inflation eased to 3.3 percent, its first cooling in months, but a divided Fed that held rates on July 29 keeps the prime rate at 6.75 percent.