The Bureau of Labor Statistics released the Consumer Price Index (CPI) data for July 2025, offering a view of current inflation trends amid concerns about the impact of trade tariffs. The all-items CPI, which measures changes in consumer prices for a typical basket of goods and services, rose 0.2 percent from the previous month, slowing slightly from June’s 0.3 percent increase. Year over year, inflation held steady at 2.7 percent, just under the forecast of 2.8 percent.
Core CPI, which excludes food and energy because of their volatility, rose 0.3 percent in July after a 0.2 percent increase in June. On an annual basis, core inflation reached 3.1 percent, up from 2.9 percent in June and above expectations of 3.0 percent. This points to steady underlying price pressures even as headline inflation shows stability.
Financial markets responded quickly. Stock index futures gained, Treasury yields slipped, and the U.S. dollar weakened slightly. Traders saw the softer headline number as increasing the likelihood of a Federal Reserve interest rate cut in September, with rate cut odds rising to 90 percent from 84 percent before the release.
Some categories showed notable price increases linked to tariff effects. Footwear prices climbed 1.4 percent, airline fares jumped 4.0 percent, and prices rose for medical care, recreation, and household furnishings. Used car and truck prices also moved higher by 0.5 percent.
Shelter costs rose 0.2 percent in July and remain the largest contributor to overall inflation, with a 3.7 percent increase over the past year. Energy prices fell 1.1 percent, with gasoline down 2.2 percent. Food prices overall showed no change, as a rise in restaurant meals was offset by lower grocery prices.
Data collection challenges also remain. Budget cuts and staffing shortages have reduced CPI data gathering in some cities by 15 percent, and some areas have stopped in-person price collection entirely, relying more on statistical estimates.
The next CPI release, for August 2025, is set for September 11, 2025.
