US prices climb 2.7% in July as Donald Trump tariffs hit wallets, jobs data cut sharply & refund concerns grow; details here

Time of India

a day ago

US consumer prices were 2.7% higher in July compared with the same month last year, according to the latest consumer price index (CPI) data released Tuesday. The annualised inflation rate has risen 0.4% since April, reversing a decline seen in the spring. While the overall inflation rate remained steady between June and July, core inflation – which excludes food and energy – rose 3.1% last month, a faster pace than June.
Tariffs begin to filter through to consumers
The rise comes as Donald Trump's trade policies continue to reshape import costs. Since the spring, a 10% universal tariff on all imports has been in effect, alongside higher duties on sectors such as steel and aluminium. Additional tariffs targeting dozens of countries, including major US trading partners, were introduced on 7 August. On Monday, Trump delayed implementing higher tariffs on China for 90 days to allow for further talks.
Economists note that tariffs often take time to affect retail prices. Some companies had stocked up to delay cost increases, but recent price rises indicate that costs are being passed to consumers. Leaders from Walmart, Nike and Macy's had previously warned of such effects.
Labour market faces unexpected strain
Tariffs have also weighed more heavily on the job market than anticipated. Employment data revisions this month reduced the previously reported 291,000 jobs added in May and June to just 33,000. This shift reflects a much weaker labour market than initially thought.
The combination of higher prices and slower job growth leaves the Federal Reserve in a challenging position. Its mandate to balance employment and inflation is complicated by the uncertainty surrounding tariff impacts. While Trump has urged the Fed to cut interest rates to spur growth, officials have so far avoided changes, citing incomplete data on tariffs' effects.
Federal data agency under pressure
The Bureau of Labor Statistics (BLS), responsible for collecting official economic data, has seen budget cuts from the White House. These cuts have reduced its data collection capacity and could affect the accuracy of price and employment figures.
Tensions escalated when Trump dismissed BLS commissioner Erika McEntarfer shortly after the release of July's employment data. He alleged, without evidence, that figures had been 'rigged' to harm Republicans. Economists have expressed concern that such actions could undermine the credibility of official statistics.
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