Lisa Rungaro Shop at the grocery butcher counter in Miami, Florida on July 22, 2025.
Joe Raedle | Getty Images
The widespread inflation measure of inflation, which was accelerated slightly more than expected in July, was promoted on an annual basis, as President Donald Trump’s tariffs showed a largely modest effect.
The consumer price index rose 2.7% on a 12-month basis, seasonally adjusted for the month, a 0.2% increase in the month, the Bureau of Labor Statistics reported Tuesday. Estimates of 0.2% and 2.8% compared to the respective Dow Jones.
Excluding food and energy, Core CPI increased by 0.3% in a month, 3.1% from a year ago, compared to the 0.3% and 3% forecasts. Federal Reserve officials generally believe that core inflation rates are a better read of long-term trends.
A 0.2% increase in Shelter costs helped most of the index rise, but food prices were flat and energy fell 1.1%, BLS said. Used cars and trucks saw a jump of 0.5%, but the new tariff-sensitive vehicle prices remained unchanged. Transport and health services both moved 0.8% more.
Stock market futures recorded profits after reporting, but the Treasury yields were pretty much lower.
The tariffs appeared to have appeared in several categories.
For example, after a 1% increase in June, household furniture and consumables rose 0.7%. However, apparel prices rose just 0.1%, while Core Commodity prices rose just 0.2%. The commonly imported and tariff sensitive canned fruits and vegetables were flat.
“The tariffs are in numbers, but at this point they certainly haven’t been on fire,” former White House economist Jared Bernstein told CNBC. Bernstein served under former President Joe Biden.
This report is both a critical period for the economy and the BLS itself. Trump fired the former BLS commissioner after a surprisingly weak July non-farm salary report earlier this month, and on Monday he said he would nominate Bureau critic Ej Antoni as the new chief.
While political jockeys are occurring, Fed officials are closely monitoring inflation measures to weigh the next rate decision in September.
The question is whether tariffs will cause a one-off price rise or will it lead to a permanent rise in inflation? Although economists generally view the tariff impact as the former, the wide range of items covered in Trump’s dict order has caused concern that the effect could last longer.
Futures market prices strongly point to the Fed rate reduction in September. However, a large amount of data during the present could affect both the meeting decisions and the central bank’s future courses. Fed officials have recently expressed an increase in concerns about the labour market, which will portend interest rate cuts.
According to CME Group’s FedWatch, traders increased the implicit odds of their September moves after release, increasing the chances of another October cut to around 67%.
CPI is not the Fed’s main inflation forecasting tool. The central bank uses the Commerce Department’s Personal Consumption Expense Price Index, but the CPI and producer price index released on Thursday will be fed into that calculation.
This is fast news. Please update for updates.
