US Inflation Hits Six-Month High as Tariffs Raise Core Prices

In July, U.S. inflation rose at its highest rate in six months, with core inflation increasing 3.1% year-over-year, reflecting the impact of President Donald Trump's tariffs on consumer prices. Despite headline consumer prices holding steady at 2.7%, core prices excluding food and energy rose 0.3% monthly, the largest gain since February, driven by tariff-related increases in goods like footwear, apparel, and household furnishings. While lower gasoline prices and moderated food inflation provided some relief, tariffs on imports—such as steel, aluminum, and Chinese goods—have pushed costs for American companies and consumers higher, potentially driving core inflation to 3.7% by the end of the year. The Federal Reserve faces a challenging environment, balancing persistent inflation with slowing job growth; although markets expect a possible interest rate cut, Fed Chair Jerome Powell has warned against moves that could worsen inflation. President Trump has publicly pressured the Fed for lower borrowing costs, challenging traditional central bank independence amid these economic pressures. Overall, the data underscore the growing influence of tariffs in fueling inflation despite some easing in energy and food prices.