Inflation slows but prices remain elevated as Iran war and spending on AI push up prices

Inflation cooled slightly in July, reaching a 3.4% annual rate according to the latest CPI report. While energy prices declined following a spring surge, overall costs remain elevated due to the Iran war and significant spending on AI. This cooling trend may reduce pressure on the Federal Reserve to raise key interest rates. Additionally, new inflation data has led to slight adjustments in the projected 2027 Social Security COLA, which could be among the largest in years.