Key inflation gauge holds at 3.7% in July year-over-year

Warsh signals further rate hikes may be needed

The Commerce Department reported Wednesday that an inflation measure closely watched by the Federal Reserve rose 3.7% in July compared with a year earlier, matching June’s reading. The flat result left the year-over-year rate unchanged from June and well above the Fed’s 2% target.

The July reading extends a stretch of elevated inflation that began after the United States and Israel struck Iran in late February, when the year-over-year rate stood at 2.9%.

The Federal Reserve’s Kevin Warsh signaled that rate hikes may be needed to bring inflation back toward target, according to the AP report.

According to the AP report, the elevated readings come as many Americans are still struggling with higher costs, with trips to the grocery store and gas station more painful than they were a year ago. Rising costs are impacting the decisions of both households and businesses, the AP report said.