US prices rose 3.4% in the year to July, slightly lower than the 3.5% in the year to June, new figures show.

Energy remained volatile as the Middle East conflict has continued. While gasoline prices were down 2.9% in July compared to June, they were up 24.6% over the year.

Month to month, inflation rose 0.1%, mainly due to an increase in housing costs, the Bureau of Labor Statistics said. Even small moves in rent can lift the overall headline figure as it makes up a large share of household spending.

Food prices rose only slightly in July and at a slower rate than in June, while energy prices fell, offering some relief for consumers.

While inflation was slightly lower in July compared to June, that means prices are rising at a slower pace, not that prices overall are falling.

Prices excluding food and energy rose 0.2% after staying flat in June, with medical care and airline tickets edging higher and car insurance continuing to fall.

The new Federal Reserve chair, Kevin Warsh, has said the central bank’s priority is to “keep inflation moving down” while avoiding unnecessary shocks to the economy.

In a recent press briefing, Warsh said the Fed cannot use a “magic wand” to undo years of above-target inflation and must stay patient as price growth cools gradually.

One of the Fed’s key jobs is to keep inflation near 2%, a level policymakers say keeps prices stable, supports steady economic growth, and helps prevent deeper downturns.

President Donald Trump has also said inflation is still too high for many families, pointing to rent and grocery bills as signs that the cost of living remains a major concern.

Financial markets reacted calmly to the latest figures, with stocks little changed as the figures were broadly in line with market expectations.

Recent labour market concerns have also softened expectations for a rate increase, after July’s report showed a loss of jobs.