US Consumer Prices Rise 0.2% July Amid Tariff-Driven Inflation

In July 2025, U.S. consumer prices rose 2.7% year-over-year, maintaining the same pace as June and slightly below economists' expectations of 2.8%. Core inflation, excluding food and energy, increased to 3.1%, signaling persistent underlying inflation pressures driven primarily by rising costs in services, shelter, and tariff-affected goods such as furniture and apparel. Cheaper gasoline and falling grocery prices helped moderate headline inflation, while prices for medical care services, airline fares, and household furnishings saw notable increases. President Donald Trump's sweeping tariffs imposed earlier in the year have contributed to higher prices in import-sensitive sectors, though some businesses are absorbing these costs to limit consumer price hikes, with some economists warning that tariff-related inflation may continue rising. The Federal Reserve faces a challenging balancing act between persistent inflation and a slowing labor market, with recent tariff impacts adding complexity to decisions on potential interest rate cuts. Additionally, concerns about data quality have emerged following staffing cuts at the Bureau of Labor Statistics and the recent firing of its head, Erika McEntarfer, amid political tensions over economic reports.