US consumer prices rose in July, reflecting the ongoing impact of recent tariff measures on the cost of goods and services.
The Consumer Price Index (CPI) showed prices were 2.7% higher compared with the same month last year. While the overall inflation rate remained steady between June and July, core inflation—which excludes energy and food—climbed 3.1%, a faster pace than in the previous month.
Food prices increased by 2.9% over the year, with restaurant and takeout meals rising 3.9%. Prices for used vehicles, housing, and medical care also rose faster than the overall rate. Energy prices, however, declined 1.6%, helping to temper the overall pace of inflation.
Economists note that tariff-related cost increases can take time to appear in consumer prices. Some retailers had built up inventories earlier in the year to delay the impact, but the latest figures suggest businesses are now beginning to pass higher costs on to customers.
A universal 10% tariff on imports, alongside additional sector-specific tariffs, has been in place since the spring. While some targeted tariff increases were postponed for certain countries, many have already taken effect, influencing pricing dynamics across multiple industries.
The labor market has also shown signs of strain. Recent revisions to official data reduced previously reported job gains for May and June from 291,000 to 33,000, indicating a weaker employment picture than initially estimated.
The Federal Reserve faces a complex policy environment as it seeks to balance price stability and employment growth. While some observers have called for interest rate cuts to support the economy, Fed officials have maintained a cautious stance, citing uncertainty over the full economic impact of the tariff measures.
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