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the staff of the Ridgewood blog
WASHINGTON, D.C. — Consumer prices rose 2.7% year-over-year in July, coming in slightly below economists’ expectations and signaling modest inflation pressures despite ongoing tariff concerns. The Consumer Price Index (CPI), released Tuesday by the Bureau of Labor Statistics (BLS), also showed a 0.2% monthly increase, matching forecasts.
Excluding volatile food and energy prices, core CPI climbed 0.3% for the month and 3.1% over the past year, in line with predictions. This marks the largest monthly core inflation increase since January and the highest annual rate since February.
What’s Driving the Numbers
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Shelter costs rose 0.2%, leading much of the monthly gain.
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Energy prices fell 1.1%, while food costs remained unchanged.
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Used vehicle prices jumped 0.5%, while new car prices stayed flat.
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Medical care and transportation services each surged 0.8%.
Despite tariffs on a range of goods under former President Donald Trump’s trade policies, the data showed only moderate pricing impacts in most categories. For instance, household furnishings rose 0.7%, but apparel prices edged up just 0.1%, and canned fruits and vegetables remained flat.
“The tariffs are in the numbers, but they’re certainly not jumping out hair on fire at this point,” said former White House economist Jared Bernstein.
Market and Fed Reaction
Following the release, stock futures gained, Treasury yields dipped, and traders increased bets on a September interest rate cut by the Federal Reserve. CME Group’s FedWatch Tool now places the probability of a September cut above 65%, with odds of an additional October cut rising to 67%.
Morgan Stanley’s chief economic strategist Ellen Zentner noted that the softer-than-expected data could give the Fed more room to prioritize labor market concerns over inflation risks in its September policy meeting.
Political and Data Reliability Concerns
The BLS has recently faced political criticism and operational challenges, including budget cuts, staffing shortages, and the halting of data collection in several cities. President Trump, after firing the previous commissioner over a weak jobs report, has announced plans to nominate E.J. Antoni as the bureau’s next chief.
The Road Ahead
Economists remain divided over whether tariffs will have temporary or lasting effects on inflation. While the CPI is not the Fed’s primary inflation gauge, it plays a role in shaping policy decisions—especially alongside the Producer Price Index (PPI), set for release Thursday, and the Personal Consumption Expenditures (PCE) Index later this month.
Inflation-adjusted average hourly earnings barely moved in July, rising just 0.1% for the month and 1.2% annually, signaling continued wage pressure for U.S. workers.
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If the fed cuts rates , inflation will run rampant.
Which would actually be a good thing but somehow everyone and their mother thinks they know better than Trump who’s been at this game a long time.
No it won’t
Stop with the BS and get back to your pickleball game
Proof here that there are NPCs on the right.