America’s Inflation Cools Off in July; Gas Prices Jump by 25%

American inflation is cooling. Prices rose 3.4% over the 12 months ended July 2026, down from 3.5% the month before.

The U.S. Consumer Price Index (CPI) groups everything people buy into 12 major categories to track how prices change over time.

It is based on the latest data from the Bureau of Labor Statistics.

For most things people buy, the worst of the inflation era genuinely appears to be fading. Only gas prices saw the steepest jump.

U.S. inflation slowed to 3.4% in July 2026, but gasoline prices surged 24.6% over the same 12 months, the single biggest price jump in the entire CPI report.
Strip out energy, and the inflation picture looks almost calm, with core prices rising just 2.5%, close to the Federal Reserve’s 2% target.
Used car prices and drug costs are actually falling, while food and shelter costs are holding relatively steady.

Outside of energy, the picture is noticeably calmer.

Food prices rose 3.0% over the year, split between food away from home at 3.4% and groceries at 2.7%.
Shelter, one of the most stubborn inflation drivers in the post-pandemic period, came in at 3.2%.
Transportation services rose 2.9%, and medical care services climbed 2.7%.

None of these numbers are painless, but they are all at levels far more manageable than those Americans were experiencing two years ago.