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Core Inflation Accelerates in July as Tariff Pass-Through Begins

Unchanged headline inflation at 2.7% with core prices rising to 3.1% prompted closer scrutiny of a possible September rate cut, raising questions over BLS data reliability

A woman looks at items at a shop in Tokyo, Japan, March 24, 2023. REUTERS/Androniki Christodoulou/File Photo
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Overview

  • July CPI edged up 0.2% from June, keeping annual headline inflation at 2.7%.
  • Core inflation excluding food and energy rose 0.3% in July, lifting the year-over-year rate to 3.1%.
  • Tariff-sensitive items such as household furnishings, footwear and furniture saw larger monthly price jumps while most imported goods held flat initially.
  • Financial markets boosted the odds of a September Fed rate cut to around 90% but highlighted persistent shelter and services inflation as a hurdle.
  • The Trump administration’s dismissal of BLS Commissioner Erika McEntarfer and nomination of critic E. J. Antoni have raised concerns about the bureau’s political independence and credibility.