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Spencer Platt | Getty Images<\/p>\n<\/div>\n<\/div>\n<\/div>\n
Inflation held steady<\/a> in July as price declines for staples like groceries and gasoline helped offset price increases for consumers.<\/p>\n However, there were worrying signs under the surface, including evidence that Trump administration policies are stoking inflation<\/a> for certain goods and services, economists said. Those effects will likely become more pronounced later this year, they said.<\/p>\n \u201cTariff and immigration policy fingerprints are all over the report,\u201d Mark Zandi, chief economist of Moody\u2019s, said.<\/p>\n \u201cThe tariff and immigration effects aren\u2019t screaming at us, but they\u2019re certainly speaking very loudly and over the next couple months they\u2019ll start yelling,\u201d Zandi said.<\/p>\n The consumer price index<\/a> rose 2.7% in July relative to a year earlier, unchanged from the prior month and less than expected, the Bureau of Labor Statistics reported Tuesday.<\/p>\n CPI is a widely used measure of inflation that tracks how quickly prices rise or fall for a basket of goods and services, from haircuts to coffee, clothing and concert tickets.<\/p>\n<\/div>\n In July, grocery and gasoline prices declined \u2014 or, deflated \u2014 by a respective 0.1% and 2.2% on a monthly basis from June, according to CPI data.<\/p>\n Economists like to look at inflation data that strips out energy and food prices, which can be volatile from month to month.<\/p>\n<\/div>\n This so-called \u201ccore\u201d CPI figure has been rising in recent months: It rose 3.1% in July 2025 from July 2024. That\u2019s up from a 2.9% annual pace in June and is the fastest annual rate for core CPI since February.<\/p>\n \u201c[W]e expect it will rise further to a peak of 3.8% by the end of the year as tariffs bleed through more fully to consumer prices,\u201d Michael Pearce, deputy chief U.S. economist at Oxford Economics, wrote Tuesday.<\/p>\n<\/div>\n Tariffs are a tax placed on imports, paid by U.S. companies that import the good or service.<\/p>\n Businesses generally pass on those higher costs to consumers, at least in part, economists said. The Budget Lab at Yale University estimates<\/a> the average household will lose $2,400 in the short run as a result of all tariffs the Trump administration put in place as of Aug. 6.<\/p>\n Tariff effects are most apparent for goods prices, like those for household furnishings and apparel, Zandi said.<\/p>\n<\/div>\n Inflation for all \u201ccore\u201d goods \u2014 which strips out food and energy products \u2014 was up 0.2% in each of the last two months, according to CPI data. In more typical times, goods prices are generally flat or declining, Zandi said.<\/p>\n \u201cThat they\u2019re on the rise is clear evidence of tariff impact,\u201d Zandi said.<\/p>\n Household furnishings prices were up 0.7% on a monthly basis in July, according to CPI data. Apparel prices were up a more muted 0.1%, and toys 0.2%.<\/p>\n<\/div>\n On an annual basis, \u201ccore\u201d goods inflation was up 1.2% in July, the fastest pace in over two years<\/a>.<\/p>\n \u201cThere are clear signs a range of goods prices are moving higher, pushing core goods inflation to a more than two-year high, but some major tariffed items, including autos and major appliances, have yet to show much impact,\u201d Pearce wrote.<\/p>\n Stephen Miran, chair of the White House Council of Economic Advisers, said<\/a> Tuesday on CNBC\u2019s \u201cSquawk on the Street\u201d that the CPI data shows \u201cno evidence whatsoever\u201d that tariffs have fueled higher consumer prices.<\/p>\n \u201cIt just hasn\u2019t panned out,\u201d Miran said.<\/p>\n<\/div>\n The full effect of tariffs is unlikely to be felt for several months, as businesses delay passing on higher costs, economists said.<\/p>\n \u201cThis isn\u2019t a one-month event,\u201d said Sarah House, a senior economist at Wells Fargo Economics. \u201cThe impact will be dragged out over many months, as businesses are waiting to see where those tariffs settle.\u201d<\/p>\n They may test consumers\u2019 price sensitivity slowly instead of all at once, she said. Companies may also still be selling old inventory that wasn\u2019t subject to import duties, economists said.<\/p>\n \u201cIt\u2019s been a very dynamic time for these trade negotiations \u2026 but we\u2019re still, you know, a ways away from seeing where things settle down,\u201d Jerome Powell, Federal Reserve chair, said<\/a> last month.<\/p>\n Additionally, there\u2019s evidence that Trump administration policy around immigration is limiting the supply of immigrant labor in certain sectors of the economy, putting upward pressure on inflation, Zandi said.<\/p>\n This is most apparent in personal care services \u2014 categories like haircuts, dry cleaning and pet services \u2014 that employ a lot of immigrants, he said. Fewer immigrants working in these sectors limits labor supply and puts upward pressure on the wages businesses pay to attract workers, he said.<\/p>\n<\/div>\n<\/div>\n\nInflation most evident for consumer goods<\/h2>\n
Not a \u2018one-month event\u2019<\/h2>\n
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