US Inflation Steady in July Amid BLS Integrity Concerns

In July, U.S. consumer prices saw a modest increase, driven primarily by higher shelter costs and rising prices in services such as healthcare and airline fares, leading to the largest inflation jump in six months. Core inflation, excluding food and energy, rose to 3.1%, slightly above expectations, which complicates the Federal Reserve's decision-making ahead of a potential September interest rate cut. President Trump’s recent dismissal of Bureau of Labor Statistics (BLS) head Erika McEntarfer and nomination of economist E.J. Antoni, known for criticizing the BLS, has raised concerns about the agency's data integrity amid budget cuts and staffing reductions. These developments have fueled debate over the reliability of inflation data, with market participants and economists emphasizing the importance of accurate CPI figures for financial instruments like Treasury Inflation-Protected Securities. Tariff policies under President Trump have also played a role in inflation dynamics, contributing to price increases in goods such as furniture, apparel, and footwear, although their overall impact remains somewhat unclear. The Federal Reserve faces a dilemma balancing sticky inflation pressures with weakening job reports, with upcoming employment data expected to heavily influence policy decisions.