U.S. inflation cools to 3.4% in July; Bitcoin steady near $64,000

U.S. inflation eased for a second consecutive month in July, suggesting the spring's energy-led price shock is fading even as inflation remains above the Federal Reserve's 2% goal. The Consumer Price Index rose 0.1% in July on a seasonally adjusted basis, the Bureau of Labor Statistics said Aug. 12. The reading matched expectations and pulled year-over-year CPI down to 3.4% from 3.5% in June. Core CPI, which excludes food and energy, increased 0.2% on the month and 2.5% from a year earlier. U.S. stock futures moved higher after the release. The July data extend a pullback from May, when headline inflation reached 4.2% amid an energy shock. After slipping to 3.5% in June, July delivered a second cooler print, offering policymakers some relief after months of renewed price pressure. Housing costs remained a key driver. Shelter prices rose 0.1% and accounted for roughly two-thirds of the monthly gain in overall CPI. Rent and owners' equivalent rent both increased 0.3%. Food prices edged up 0.1%. Prices for food away from home rose 0.3%, while grocery prices fell 0.1%. Energy prices declined 1.5% in July, led by a 2.9% drop in gasoline prices on a seasonally adjusted basis. On an annual basis, though, energy was still up 14.7%, and gasoline remained 24.6% higher than a year earlier, reflecting the first-half 2026 oil shock tied to Middle East tensions and supply disruptions. Brent crude was around $91 a barrel at the time of writing, with West Texas Intermediate (WTI) near $83. Core inflation offered a cleaner signal, with the 2.5% annual pace among the softest since early 2021. Several services categories continued to rise: medical care increased 0.4% in July, airline fares jumped 2.2%, used cars and trucks gained 0.4%, and new vehicles added 0.1%. For the Federal Reserve, the report provides breathing room rather than forcing an immediate shift. The central bank held its federal funds target range at 3.50% to 3.75% in late July, though three policymakers dissented in favor of a hike. Officials have stressed that several months of cooler readings are needed to confirm inflation is moving back toward 2%. July's cooling reduces near-term pressure for another increase, but energy remains a clear risk. A renewed oil shock or persistent services inflation could revive the case for tighter policy later this year, especially if housing costs stop easing. Markets had largely positioned for a softer CPI print, limiting broader moves across risk assets. Real average hourly earnings also showed mild strain as prices outpaced wage growth in some measures. Bitcoin traded quietly around the release, down about 0.4% over the prior hour. The cryptocurrency moved between roughly $63,800 and $64,300 in the hours surrounding the CPI report after dipping into the low $63,000s earlier in the session. In recent weeks, bitcoin has hovered in the low-to-mid $60,000s, with the latest inflation data failing to trigger the sharp volatility seen in earlier periods of macro uncertainty. The next major test comes Sept. 11, when the government is scheduled to publish August CPI data. Investors and Fed officials will focus on energy, shelter and core services to gauge whether July's cooling is durable or simply another temporary pause.