US consumer prices rose in July, with new data showing inflationary pressure partly linked to recent changes in tariff policy.
The Consumer Price Index (CPI), which measures the average change over time in prices paid for goods and services, was 2.7% higher than a year earlier. While inflation eased earlier in the year, the annual rate has climbed 0.4% since April. Core inflation, which excludes food and energy prices, increased 3.1% in July compared to a year ago — a faster pace than in June.
Food prices rose 2.9% year-on-year, driven by a 3.9% increase in prices for restaurants and takeaway meals. Prices for used cars, housing, and medical care also rose faster than the overall inflation rate. Energy prices fell 1.6% over the same period, helping to moderate the broader index.
Economists note that recent tariffs on imports are beginning to show up in consumer prices. While some businesses stocked inventory earlier in the year to delay passing on higher costs, recent trends suggest that companies have begun adjusting prices.
The labor market has also shown signs of cooling. A recent revision to employment data reduced previously reported gains for May and June from 291,000 jobs to 33,000. This slowdown, alongside rising prices, presents challenges for the US Federal Reserve, which is tasked with balancing price stability and employment.
The central bank has held interest rates steady in recent months, citing uncertainty over the economic impact of the tariffs. Economists are watching upcoming economic reports closely to assess whether price increases will persist in the coming months.
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