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15h ago

July Inflation Steady as Core Rises and Tariff Pressures Emerge

Markets have raised odds of a September Fed rate cut to near 90% after July’s CPI showed rising tariff-sensitive prices.

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

  • Headline CPI rose 0.2% month-over-month and 2.7% year-over-year in July while core CPI climbed 0.3% and 3.1%, marking the largest monthly core increase in months.
  • Import-exposed categories such as furniture, household wares, footwear and toys showed noticeable price jumps consistent with early tariff pass-through.
  • The Bureau of Labor Statistics suspended price collection in some areas and increased imputation rates after budget cuts and the ouster of Commissioner Erika McEntarfer.
  • July’s payroll report was revised down to just 73,000 new jobs with sizable cuts to May and June figures, intensifying concerns over data credibility.
  • Financial markets now price nearly a 90% chance of a September rate cut even as Treasury officials argue that tariffs have not materially driven inflation.