Key inflation gauge remains elevated during Iran war and ongoing US trade fights

Aug 26, 2026, 5:40 AM | Updated: 5:44 am

FILE - A person carries a shopping bag in Philadelphia, Dec. 10, 2025. (AP Photo/Matt Rourke, File)
Credit: AP Photo/Matt Rourke

(AP Photo/Matt Rourke, File)

BY ASSOCIATED PRESS

WASHINGTON (AP) — An inflation measure closely watched by the Federal Reserve was unchanged last month in the latest sign that many Americans are still struggling with higher costs.

The Commerce Department’s Wednesday report showed that prices rose 3.7% in July compared with a year earlier. Inflation has worsened since the Iran war began in late February, when it stood at 2.9%. It’s noticeably above the Fed’s target of 2%.

Stubbornly high prices are shaping up to be a key issue in the midterm elections, particularly as the Iran war keeps gas prices high, President Donald Trump is threatening new tariffs on Canada and China, and spending on AI infrastructure has pushed up the cost of computers, gaming consoles, and semiconductors.

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