The consumer price index (CPI) rose just 0.2% in July, keeping the year-over-year rate steady at 2.7%. This beat economists’ predictions, surprising many who expected higher inflation as more of President Trump’s tariffs took effect. The Bureau of Labor Statistics’ report marks the second straight month with inflation holding at 2.7%.
With this solid report, Trump ramped up pressure on the Federal Reserve to cut interest rates at its September meeting. On Truth Social, he urged, “Jerome ‘Too Late’ Powell must NOW lower the rate.” Trump added, “The damage he has done by always being Too Late is incalculable.”
Core CPI, excluding food and energy, rose 0.3% for the month and 3.1% annually. The monthly increase matched expectations, but the yearly figure was slightly above predictions. Most of the rise came from shelter prices. Meanwhile, energy prices dropped 1.1%, and food prices remained flat.
Used cars and trucks jumped 0.5%, with transportation and medical care also rising by 0.8%. Despite tariffs, many imported goods like clothing and canned fruits stayed steady. Household furnishings saw a small 0.7% bump.
Former White House economist Jared Bernstein admitted tariffs aren’t impacting inflation much yet. “The tariffs are in the numbers, but they’re certainly not jumping out hair on fire at this point,” he told CNBC.
CNN noted food prices remain steady, with grocery prices actually down 0.1%. “Look at that food. This is where people spend their money,” a CNN commentator said.
Stocks responded positively, with the Dow and S&P 500 up 0.6%, and the Nasdaq rising 0.8% after the report.
Trump’s tariffs on over 90 countries took effect last week. Some rates hit 50%, like those on India and Brazil, while others range from 15% to 40%. On Monday, Trump extended China’s tariff deadline by 90 days to negotiate a deal.