Inflation cools to 3.4% in July as energy relief persists
US inflation slowed for a second consecutive month in July 2026 to 3.4%, down from 3.5% in June, as energy costs continued to ease following the ceasefire between the US and Iran. Energy-driven relief in gas prices and shelter inflation easing offset persistent food price pressures.
What Happened
Inflation in the United States decreased to 3.4% in July from 3.5% in June of 2026, marking the second consecutive monthly slowdown. Inflation moved further below the 2023 high of 4.2% reached in May, as the impact of the energy shock caused by the war with Iran continued to ease.
Where the Relief Is Coming From
- Gasoline prices rose 24.6% year-over-year, down from 26.7% in June, while fuel oil prices increased 39.1%, compared with 42.9% previously.
- Inflation also eased in shelter, to 3.2% from 3.3%, while food inflation remained unchanged at 3%.
What This Means for Expats and Foreigners
If you're an expat or foreign resident recently arriving in the US, moderate inflation at 3.4% is good news for your overall cost of living. Gas and heating costs—major budget items in American life—are trending cheaper than earlier this year. If you're renting, shelter inflation is easing, which may slow the pace of rent increases. However, groceries (at 3% annual inflation) remain a persistent cost pressure, so budget accordingly. Those sending money home should monitor how the cooling inflation affects the dollar's value against their home currency.
Sources:
- U.S. Labor Department data released August 12, 2026
- U.S. Bureau of Labor Statistics Consumer Price Index release for July 2026
Sources
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