US inflation rises to 2.8% in July 2025 as Trump tariffs push prices higher, core CPI hits six-month high

Time of India

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Core inflation shows biggest jump in six months
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Tariffs put pressure on prices and consumers
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July's Consumer Price Index (CPI) report is due on Tuesday at 8:30 a.m. ET. It shows how much prices have changed. Prices are expected to have risen 2.8% compared to last year, which is slightly higher than June's 2.7% increase.Month-over-month, prices are expected to rise 0.2% in July, which is a bit slower than June's 0.3% gain. The slower monthly rise is mainly because gasoline prices fell and food inflation is expected to soften a little, as stated in the report by Yahoo Finance.The "core" CPI excludes food and energy prices because they can change a lot. Core inflation is expected to rise 3.0% annually in July, up from 2.9% in June. This shows that goods inflation is increasing and no longer balanced out by lower services inflation. Core prices are expected to increase 0.3% month-over-month, higher than June's 0.2%, marking the strongest monthly gain in six months.In June, tariff-driven cost increases started showing up in consumer prices. For example, apparel prices rose 0.4% and footwear prices rose 0.7%, after months of falling prices. Furniture and bedding prices also increased 0.4% in June, reversing a 0.8% drop from May. This suggests tariff costs are reaching consumers, as per the report by Yahoo Finance.Wells Fargo economist Sarah House said July's CPI will show more evidence of tariffs pushing prices higher. She added it's still early to know exactly how these import taxes affect consumers, sellers, and exporters.House also said consumers are getting tired of price increases, making it harder to raise prices. She expects inflation to rise but not too much in the second half of the year, with core CPI and core PCE deflator around 3% by the fourth quarter, as stated by Yahoo Finance.The upcoming report arrives amid ongoing trade developments that could change US tariffs, which are now near 18.6%—the highest since 1933, as per the Yale Budget Lab. Despite inflation, markets expect the Federal Reserve to lower interest rates in September, mainly due to concerns about the US labor market's weakness after revisions and persistent inflation.According to the report by Yahoo Finance, Citi analyst Stuart Kaiser said CPI might cause the Fed problems because rising core goods prices may force tough decisions. Kaiser noted goods inflation increased last month and tariffs might keep pushing prices up in future reports.He pointed out that two Fed officials dissented in July's meeting, showing uncertainty about policy direction if inflation rises, though the general trend is toward lower rates. As of Tuesday afternoon, there is an 87% chance the Fed will cut rates by 0.25% in September, up from 57% last month, as per the CME FedWatch Tool.Inflation in the US is expected to be 2.8% in July 2025, slightly higher than June's 2.7%, as per Bloomberg data.Tariffs are pushing up prices on goods like clothes, footwear, and furniture, making everyday items cost more for consumers.