U.S. Inflation Report Shows Effects of Trump’s Tariffs
A key measure of underlying inflation rose in July as President Trump’s tariffs intensified price pressures across a wider range of consumer goods and services, although the overall increase was likely not significant enough to deter the Federal Reserve from lowering interest rates at its next meeting in September.
The Consumer Price Index stayed steady at 2.7 percent compared to the same time last year. On a monthly basis, prices rose 0.2 percent from June. But an important gauge tracking consumer prices that strips out volatile food and energy prices accelerated more rapidly.
“Core” C.P.I., which is closely watched by the central bank, jumped 0.3 percent over the course of the month, or 3.1 percent on a year-over-year basis. That is one of the largest monthly increases so far this year and represents the fastest annual pace in five months. In June, core inflation rose 0.2 percent from the previous month, or 2.9 percent from July 2024.
Businesses have managed to avoid passing along price increases because of a strategy earlier in the year to stockpile goods that were likely to be subject to Mr. Trump’s levies. Many companies have also sought to absorb the costs themselves in order to avoid driving away customers, some of whom are increasingly under financial strain.
But the July data showed more businesses reaching a tipping point, left with little option but to raise prices following June’s notable uptick. The biggest impact has so far been concentrated in categories such as furniture, appliances and other household wares, as well as recreation goods and footwear.
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A sharp drop in energy prices helped to offset rising costs elsewhere, which kept the headline inflation figure steady. The overall energy index dropped 1.1 percent, with gasoline prices down 2.2 percent.
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Mr. Trump last week announced that he would install a temporary governor to join the board, which votes on interest rates at every policy meeting. A vacancy unexpectedly opened up at the start of the month when Adriana Kugler, a governor, announced that she was leaving before her term was set to expire at the end of January. The president tapped a longstanding critic of the Fed, Stephen Miran, who most recently served as chair of Mr. Trump’s Council of Economic Advisers.
July’s inflation report is also the first big economic data release from the Bureau of Labor Statistics since Mr. Trump fired its head after the weaker-than-expected jobs report. The president claimed without evidence that Erika McEntarfer, who had run the agency since 2024, had “rigged” the federal hiring data to harm him politically. Economists decried that move, warning that any attempt to undermine what has always been considered reliable, independently produced statistics from the government agency would be economically and financially damaging.
On Monday, the president announced his decision to nominate E.J. Antoni, an economist at the conservative Heritage Foundation who has criticized the B.L.S. in the past, to lead the agency.
The Consumer Price Index stayed steady at 2.7 percent compared to the same time last year. On a monthly basis, prices rose 0.2 percent from June. But an important gauge tracking consumer prices that strips out volatile food and energy prices accelerated more rapidly.
“Core” C.P.I., which is closely watched by the central bank, jumped 0.3 percent over the course of the month, or 3.1 percent on a year-over-year basis. That is one of the largest monthly increases so far this year and represents the fastest annual pace in five months. In June, core inflation rose 0.2 percent from the previous month, or 2.9 percent from July 2024.
Businesses have managed to avoid passing along price increases because of a strategy earlier in the year to stockpile goods that were likely to be subject to Mr. Trump’s levies. Many companies have also sought to absorb the costs themselves in order to avoid driving away customers, some of whom are increasingly under financial strain.
But the July data showed more businesses reaching a tipping point, left with little option but to raise prices following June’s notable uptick. The biggest impact has so far been concentrated in categories such as furniture, appliances and other household wares, as well as recreation goods and footwear.
.....
A sharp drop in energy prices helped to offset rising costs elsewhere, which kept the headline inflation figure steady. The overall energy index dropped 1.1 percent, with gasoline prices down 2.2 percent.
.....
Mr. Trump last week announced that he would install a temporary governor to join the board, which votes on interest rates at every policy meeting. A vacancy unexpectedly opened up at the start of the month when Adriana Kugler, a governor, announced that she was leaving before her term was set to expire at the end of January. The president tapped a longstanding critic of the Fed, Stephen Miran, who most recently served as chair of Mr. Trump’s Council of Economic Advisers.
July’s inflation report is also the first big economic data release from the Bureau of Labor Statistics since Mr. Trump fired its head after the weaker-than-expected jobs report. The president claimed without evidence that Erika McEntarfer, who had run the agency since 2024, had “rigged” the federal hiring data to harm him politically. Economists decried that move, warning that any attempt to undermine what has always been considered reliable, independently produced statistics from the government agency would be economically and financially damaging.
On Monday, the president announced his decision to nominate E.J. Antoni, an economist at the conservative Heritage Foundation who has criticized the B.L.S. in the past, to lead the agency.
