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Global Economy · 12 August 2026

US inflation eases to 3.4 per cent, taking pressure off Federal Reserve

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US monetary policy shapes global borrowing costs, commodity prices and currency markets. A sustained US disinflation reduces upward pressure on Australian interest rates indirectly, but does not directly change your bills.

In a nutshell: US headline CPI rose 3.4 per cent in the year to July 2026, down from 3.5 per cent in June, according to Bureau of Labor Statistics data released 12 August. Core CPI — excluding food and energy — rose 0.2 per cent for the month and 2.5 per cent annually, matching the slowest pace since early 2021. Energy prices fell 1.5 per cent. The result is seen as reducing urgency for the Federal Reserve to raise rates further.

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What they’re saying

Core reading at its slowest since March 2021 is the detail markets focused on; it implies the Fed’s next move is more likely a hold than a hike.
Total US power usage forecast to rise 2.15% in 2026, driven by data centre expansion — a future inflation input the current CPI does not yet fully capture.

Data from official US Bureau of Labor Statistics release; confirmed by Bloomberg and CNN. Figures are straightforward government statistics.

Consumer Price Index Summary - 2026 M07 Results US Core Inflation Comes in Subdued, Easing Pressure on Fed - Bloomberg US annual inflation cooled to 3.4% in July as gas prices ease | CNN Business
Do I care?
Softer inflation reduces the risk of further Fed hikes, generally supportive of equity valuations in the near term.

Nothing to do; file this as context for why global markets were calm this week.

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