Headline CPI rose 0.2% from June, down slightly from the prior month’s 0.3% increase, keeping the annual rate steady at 2.7% — just under the 2.8% forecast.
Core CPI, which excludes food and energy, ticked up 0.3% on the month and 3.1% year-over-year — the highest annual core reading in five months. Price gains were driven by services like airline fares, healthcare, household goods, and auto parts. Energy costs fell 1.1%, with gasoline down 2.2%, while food prices were largely unchanged.
For the Fed, it’s a balancing act. The mild headline figure supports expectations for a possible 25 bps rate cut in September to counter labor market weakness. But the stubborn rise in core prices — especially in services — keeps caution in play. Upcoming jobs data will likely tip the scales on whether the cut actually happens.
Overall, inflation remains contained on the surface, but underlying pressures are still in the mix — leaving the Fed’s next move far from a done deal.