U.S. Inflation Holds Steady July Amid Mixed Core Price Trends

U.S. inflation held steady at an annualized rate of 2.7% in July, with lower gasoline and food prices offsetting increases from President Donald Trump's tariffs on imported goods. Core inflation, which excludes volatile food and energy costs, rose slightly to 3.1%, driven in part by businesses passing on tariff-related price hikes. While tariffs have contributed to higher prices for some imported items such as clothing and furniture, many companies are absorbing a portion of these costs, limiting their broader inflationary impact. The Federal Reserve faces a challenging balancing act as inflation remains above its 2% target amidst signs of a weakening labor market, with job gains slowing significantly this spring. President Trump has publicly urged Fed Chairman Jerome Powell to cut interest rates to stimulate job growth, but Powell and the Fed have held off on rate changes, wary of persistent inflation pressures. Financial markets reacted positively to the inflation report, anticipating the Fed may still consider a rate cut in September despite inflation concerns.