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US Economy: Inflation eases, prices stay high

By Sohail Khan 15 August 2026, 10:10 pm

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Business News›News›International›World News›US Economy: Inflation eases but prices remain high, retail sales fall, jobless claims rise

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US Economy: Inflation eases but prices remain high, retail sales fall, jobless claims rise

Synopsis

Inflation eased last month, but prices remain elevated for American consumers. Retail spending decreased sharply, surprising economists and signaling a slowdown. Existing home sales declined due to record prices and high mortgage rates. Wholesale inflation also fell, offering some relief for future consumer prices. Jobless claims rose slightly but the labor market remains stable.

US price pressures eased, but weaker consumer spending and housing activity signalled growing economic concerns.<br> — US inflation eased, but weak retail spending, falling home sales and rising jobless claims point to a slowing economy.

The impact of the economy and inflation on the lives of Americans was of main concern over the past week. Shopping at the grocery store and gas station has become more expensive than last year and rising prices are affecting the decisions of both families and businesses.

According to The Associated Press, here is an overview of prominent economic data and news that occurred over the past week:

Inflation eased last month, but prices remain elevated

The AP reports that inflation in the United States slowed last month and a measure of underlying price pressures have tempered which suggests that the impact of higher oil and gas prices due to the Iran war has a limited impact on the broader economy.

According to the news agency the Labor Department said that consumer prices climbed 3.4% in July from a year ago which is slightly down from 3.5% in June. However, inflation remains higher than before the Iran war began in February, when it was 2.4%. The prices rose just 0.1% from June to July on a monthly basis.

Wednesday's report, cited by AP, comes as the Federal Reserve remains divided on whether it should raise its key interest rate to curb inflation. The Federal Reserve kept its rate unchanged at around 3.6%, at a meeting last month, however, the vote was 9-3, with three dissenters favoring a rate hike.

Read more: Fitch keeps United States at 'AA+', cites economic resilience amid fiscal risks

Retail spending falls sharply, surprising economists

The news agency said that Americans had unexpectedly decreased their spending as the boost from government refunds abated over time.

According to AP citing Commerce Department data released on Friday, retail sales decreased 0.6% from a revised gain of 0.2% last month, which was the biggest fall since May 2025.

The agency said that the there was a notable increase in spending in both April and May as people reached into their tax refunds, the effects of which may have faded last month.

It reports that retail sales, excluding sales at gas stations and auto dealers, fell by 0.2% and Gas prices have risen again in recent weeks in what is apparently a stalemate in the Strait of Hormuz.

Read more: US to unleash ‘economic isolation’ on Iran next week as Trump pressure campaign intensifies

U.S. existing-home sales declined in July

AP reports that sales of previously occupied homes in the US have slowed again in July due to record prices and the highest mortgage rates in a year which have made it an impossible hurdle to overcome for potential buyers.

The agency, citing the National Association of Realtors, reports that existing home sales dipped 1.7% last month from June to a seasonally adjusted annual rate of 4.06 million units. Reporting on FactSet, AP states that the number is slightly above the 4.05 million pace that economists were expecting and has appreciated 0.7% compared to last year.

AP, citing NAR, reports that US home prices hit unprecedented levels in July, with the median sales price rising 2% year-over-year to $434,100, despite a decline in existing home sales.

Wholesale inflation eases

According to the agency, wholesale inflation has fallen last month as the hike in gas prices due to the Iran war and other costs abated which is a sign that consumer inflation could depreciate in the coming months.

The Labor Department’s producer price index rose 4.7% year-over-year in July, easing from June’s 5.5% increase. On a monthly basis, wholesale prices were unchanged, following a 0.1% decline in June.

According to the agency, citing the government's consumer price inflation report released on Wednesday, said US consumer prices showed modest abatement but inflation has still outpaced wage growth for four consecutive months. This is putting pressure on household budgets, particularly for essentials like rent and utilities, and could lead consumers to reduce spending if the trend continues

U.S. jobless claims increase but remain at a healthy level

Applications for unemployment benefits in the US had risen last week but layoffs remain at historically low levels.

The agency citing the Labor Department reported on Thursday that U.S. jobless claims rose to 209,000 last week, up from a revised 200,000 the previous week and above economists’ forecast of 205,000. The four-week average of U.S. jobless claims remained unchanged, indicating that the labor market continues to remain stable despite the weekly increase in claims.

The overall number of people collecting employment benefits dropped by 22,000 to 1.78 million the week before August 1.

According to the news agency, unemployment benefit claims are a proxy for layoffs which have been at a historically low range of around 200,000 to 230,000 a week for the past year which suggests that employed Americans enjoy job security. The American unemployment rate remains low at 4.1%, as the economy has proved its resilience despite energy prices spiking due to the war with Iran.

Mortgage rates edge down but remain above last year's levels

The agency notes relief for potential homebuyers, even though borrowing costs remain higher than they were a year ago, as the average long-term US mortgage rates have fallen slightly for the first time in six weeks on Thursday.

Mortgage buyer Freddie Mac said on Thursday that the average 30-year fixed mortgage rate edged down to 6.67%, from 6.69% the previous week. However, it remains higher than the 6.58% rate recorded a year earlier.

AP says that higher mortgage rates can result in hundreds of dollars in additional costs to borrowers and limit the purchasing power of homebuyers. Higher mortgage rates could prompt potential buyers to delay home purchases as seen while rates increased over the prior weeks. American previously-occupied home sales slowed again in July.

The agency says that the borrowing costs on 15-year fixed-rate mortgages—which borrowers often used to refinance home loans—have also fallen slightly this week. The rate fell from 6.01% last week, averaging at 5.96% which is still higher than a year ago when Freddi Mac said the rates averaged at 5.71%.

Wall Street remains near record highs

AP reports that U.S. stocks remained near record highs despite weak retail spending data. Slower consumer spending could reduce pressure on the Federal Reserve to raise rates, which would benefit Wall Street, but also risks slower economic growth and persistent inflation.

The S&P 500 remained unchanged, following its record high set the day before. The Dow Jones Industrial Average and the Nasdaq composite came slightly lower.

The AP reports that treasury yields remained mixed in the bond market, citing a reports which showed lesser retail spending last month compared to the month before which surprised economists who were forecasting another month of growth.

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inflation impact on AmericansFederal Reserve interest ratesexisting home sales USretail sales declinewholesale inflationgrocery prices increasemortgage rates trendUS jobless claimsWall Street performanceeconomic data July 2023

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