Monthly inflation rate in the United States from January 2021 to July 2026

In July 2026, the 12-month inflation rate in the United States was 3.4 percent. This reflected a decrease of 0.1 percentage points from the previous month. This measure tracks how the average cost of a broad basket of goods and services changes over a 12-month period. Looking ahead, inflation is expected to ease, with the annual rate projected to fall to around 2.2 percent in 2027.

Inflation and the consumer price index

The consumer price index (CPI) sits at the heart of how America measures inflation. It tracks the cost of a representative basket of goods and services. In 2022, annual price growth surged by eight percent, driven first by COVID-19 disruptions and later by turmoil in energy and commodity markets after Russia’s invasion of Ukraine. The spike prompted the Federal Reserve to initiate a series of interest rate hikes to bring price growth back under control.

Purchasing power parity

Purchasing power parity (PPP) is a way of comparing currencies by what they can buy rather than by their exchange rates. It asks whether the same bundle of goods costs more in one country than another. The Big Mac Index uses the price of McDonald’s signature burger to illustrate how far different currencies stretch. In January 2026, a Big Mac cost about 6.12 U.S. dollars in the U.S. while in Switzerland it was 9.12 U.S. dollars. This implies that the Swiss franc buys less burger per dollar than the market exchange rate alone might suggest.