Inflation may have stayed calm in July, but shoppers are still feeling the pinch in some areas, thanks to President Donald Trump’s tariffs.
Falling gas prices helped keep the annual inflation rate steady at 2.7%, according to the latest Consumer Price Index (CPI) data from the Bureau of Labor Statistics. On paper, that sounds like good news. But dig a little deeper and you’ll see that a growing number of everyday products are quietly getting more expensive.
In July, consumer prices ticked up by 0.2% from June, matching expectations from economists surveyed by FactSet. While the headline number looks tame, the “core” index – which excludes volatile energy and food prices – jumped 0.3%, marking its fastest monthly climb since January. That pushed the annual core inflation rate to 3.1%, the highest it’s been in five months.
Gus Faucher, senior vice president and chief economist at PNC Financial Services Group, told CNN that while inflation has cooled compared to a few years ago, consumers should brace for more noticeable price hikes. “Consumers are going to start seeing more price increases at the grocery store, at Amazon, things like that,” Faucher said. He added that the impact of tariffs will be more obvious in the coming months, with businesses passing on those costs to shoppers.
The “core goods” category – a segment economists have been watching closely because of tariffs – rose by 0.2% for the second month in a row. That steady climb is a sign that import costs are trickling into consumer prices. From electronics to household essentials, the impact is becoming harder to ignore.
Stock markets reacted positively to the overall CPI report. Dow futures climbed 210 points, or 0.47%. The S&P 500 futures rose by 0.45%, and Nasdaq 100 futures gained 0.5%. Investors seemed relieved that inflation wasn’t worse than expected, even if certain costs are still climbing.
While falling energy prices helped soften the overall inflation picture, the story isn’t as reassuring when you strip those out. Gas prices dropping means relief at the pump, but food prices, clothing, and other tariff-hit goods are heading in the opposite direction. That means households could still feel financially stretched in the months ahead.
Economists had predicted inflation would tick up slightly from June’s pace, expecting a 0.2% monthly gain and a 2.8% annual rate. The fact that the annual figure held at 2.7% shows that inflation isn’t surging, but the mix of falling gas prices and rising tariff-related costs is making the picture more complicated.
If this pattern continues, the inflation conversation will be less about “Is it getting worse?” and more about “Where is it getting worse?” For now, it’s a tale of two markets – cheaper gas helping on one side, and tariff-driven costs quietly pushing up prices on the other.
Leo Cruz brings sharp insights into the world of politics, offering balanced reporting and analysis on the latest policies, elections, and global political events. With years of experience covering campaigns and interviewing world leaders, Leo ensures readers are always informed and engaged.
