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In July, overall prices rose 2.7% year-over-year, matching June’s figures. Monthly costs climbed 0.2%, following a 0.3% increase the previous month.
An underlying measure of inflation—excluding volatile food and energy items—accelerated more than expected, increasing 0.3%. This pushed the annual increase to 3.1%.
President Donald Trump’s import tariffs have contributed to rising U.S. consumer prices. The Federal Reserve’s preferred core personal consumption expenditures price index rose 0.3% from May and advanced 2.8% on an annual basis.
Inflation has been influenced by various factors this year. Services prices that surged post-pandemic are now climbing less, or even declining. Rent hikes have softened, wage increases have slowed as labor shortages eased, and Americans have reduced their spending on travel and recreational activities, which has lowered airfares and hotel rates.
Without the tariffs, inflation likely would already be at the Federal Reserve’s 2% target. However, the tariffs began impacting consumer prices more significantly in June, with a growing effect expected over the next few months.
Current tariffs include a 30% tax on Chinese imports, 50% on steel and aluminum, and 25% on foreign cars. The average U.S. tariff rate has increased from less than 3% in January to 15% to 20%.
Retailers and manufacturers have mitigated the impact by stockpiling inventory before fees took effect and absorbing some cost increases themselves. However, these strategies are expected to play out soon.
The White House has reached trade deals with Japan, South Korea, Vietnam, and the UK, setting tariffs at 10% to 20%. On August 7th, Trump imposed levies of 10% to 50% on countries that did not reach agreements. By year’s end, Barclays expects overall inflation to reach 3.4%, with core inflation hitting 3.7%.
Source link: CPI Report Data Inflation July
