The US Federal Reserve's preferred inflation measure remained unchanged in July, with high energy prices caused by US President Donald Trump's Iran war keeping the gauge higher than targeted.

The personal consumption expenditures (PCE) price index rose 3.7 percent from a year ago, the Commerce Department said on Wednesday, steady from the month before.

The index rose 0.2 percent over last month. Both figures were largely in line with analyst expectations.

The US-Israel war on Iran has plunged the Middle East into chaos and sent global energy prices skyrocketing, as Tehran's retaliatory action has virtually blocked off almost a fifth of the world's oil and gas supplies.

Trump has been battling an affordability crisis since he took office, and his tariff policies and the war on Iran have sent prices yet higher.

Wednesday's PCE inflation data, while staying steady, remains close to three-year highs.

The Republican's handling of the economy will be a key issue in midterm elections in November, with Democrats seeking to wrest control of both houses of Congress from his party.

The PCE price index is also the US central bank's preferred gauge of inflation, which it aims to keep to a long-term two-percent target.

The Fed has missed that target for more than five years, but Wednesday's data will likely give it room to extend its pause on interest rate changes at its next meeting in September. (AFP)


Edited by Aaron Tam