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

The U.S. Commerce Department reported that prices rose 3.7 percent in July compared with a year earlier, unchanged from the previous month and above the Federal Reserve's 2 percent target. Inflation has worsened since the Iran war began in late February, when it stood at 2.9 percent, and remains elevated amid high gas prices, new tariffs on Canada and China, and AI infrastructure spending. The figures are unlikely to resolve a split at the Federal Reserve, where new Chair Kevin Warsh faces pressure to raise rates to combat higher prices.

WASHINGTON — An inflation measure closely watched by the U.S. 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 percent in July compared with a year earlier. Inflation has worsened since the Iran war began in late February, when it stood at 2.9 percent. It's noticeably above the Fed's target of 2 percent. 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. Wednesday's inflation figures are unlikely to fully resolve a split at the Federal Reserve, where most officials are willing to hold interest rates steady to see if inflation can cool on its own. But many officials have supported raising rates to slow borrowing and spending and combat higher prices. New Fed Chair Kevin Warsh will deliver a