July inflation data in the United States revealed that while price growth continues, the overall result came in slightly milder than analysts had expected. According to figures from the Bureau of Labor Statistics (BLS), the Consumer Price Index (CPI) rose 0.2% month-over-month (seasonally adjusted) and 2.7% year-over-year. Market forecasts had called for annual inflation of 2.8%, so the numbers came in just below projections.

Economists noted that tariffs introduced by President Donald Trump have so far had only a limited impact on the overall price level.

📊 Core inflation, which excludes volatile food and energy prices, showed stronger growth – 0.3% month-over-month and 3.1% year-over-year. While the monthly figure matched expectations, the annual pace exceeded the 3% estimate, marking the largest monthly increase since January. The Fed closely monitors this gauge as a key measure of long-term inflationary pressures.

What Drove Prices Higher

According to the BLS, July’s increase was driven mainly by housing costs, which rose 0.2%. Food prices remained unchanged, while energy prices fell 1.1%.

Other notable moves:

  • New vehicles: unchanged

  • Used cars and trucks: +0.5%

  • Transportation services & medical care services: +0.8%

  • Household furnishings & supplies: +0.7% (after +1% in June)

  • Apparel: +0.1%

  • Core commodities: +0.2%

  • Canned fruits & vegetables (often subject to tariffs): unchanged


Former White House chief economist Jared Bernstein told CNBC that tariff effects are visible in the data but have not yet caused significant price spikes. He added that the current pace of inflation does not indicate an overheated market.

Political Tensions Around the BLS

The release comes amid heightened tensions between President Trump and the BLS. Earlier in August, Trump dismissed the BLS commissioner following a weaker-than-expected jobs report and announced plans to nominate E. J. Antoni, a long-time critic of the agency, as the next commissioner.

Market Reaction: Higher Odds of Fed Rate Cuts

Financial markets reacted instantly. CME FedWatch showed a sharp increase in expectations that the Fed will cut rates at all three remaining meetings in 2025:

  • September: probability up from 85.9% to 91.8%

  • October: from 55.1% to 66.3%

  • December: from 45% to 56.7%

📌 The fact that core CPI exceeded expectations confirmed that underlying price pressures persist, even as headline inflation remains mild.

Voices from Wall Street

  • Alexandra Wilson-Elizondo (Goldman Sachs AM) argued that tariff effects will likely be temporary, noting that companies are adjusting inventory and pricing strategies to avoid alienating consumers.

  • Skyler Weinand (Regan Capital) said the July data was mild enough for the Fed to cut rates by 25 basis points in September, with the potential for a 50-point cut.

  • Josh Jamner (ClearBridge Investments) said the report supports the already priced-in expectation of a September cut and could boost risk assets.

  • Art Hogan (B. Riley Wealth) compared the market’s reaction to the philosophical question of whether a tree falling in a forest makes a sound if no one hears it – pointing out that the data was largely in line with forecasts, with no major surprises.

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