US Consumer Inflation Holds Steady But Tariff Worries Persist
The consumer price index (CPI) rose 2.7 percent from a year ago in July, the same rate as in June, said the Department of Labor.
But, excluding the volatile food and energy segments, "core" CPI accelerated to 0.3 percent on a month-on-month basis last month, up from a 0.2-percent rise before, the CPI report said.
From a year ago, underlying inflation rose 3.1 percent, picking up pace too.
Analysts are closely watching CPI amid increasing fears over the reliability of economic data from the Trump administration, which fired the head of the Bureau of Labor Statistics recently after a jobs report showed significantly lower hiring numbers.
They are also watching closely for weakening amid Trump's trade war, as he tries to reshape the global economy.
He has ordered a 10-percent tariff on goods from almost all trading partners. For dozens of economies including Japan, South Korea and the European Union, this level rose to various higher rates last Thursday.
Sectors that have been targeted individually -- or are under investigation by officials -- have been spared from these countrywide levies so far. But Trump has been progressively imposing steep duties on different sectors.
The headline CPI figure was a touch lower than the 2.8-percent rate expected in a median forecast of analysts surveyed by Dow Jones Newswires and The Wall Street Journal.
But experts have warned that a cooler figure could also point to a slowing economy.
Some say that even a slight acceleration in inflation would not deter the Federal Reserve from cutting interest rates soon to boost the economy.
But policymakers are trying to balance between supporting the economy and keeping cost increases under control. They are monitoring for signs that goods prices in particular have risen due to tariffs.
While businesses have stocked up in anticipation of Trump's tariff hikes this year and may not have raised consumer costs directly, economists warn that companies will not be able to do so indefinitely as narrower margins bite.
While the indexes for energy and gasoline dropped in the month, shelter costs rose in July.
Indexes that rose over the month included medical care, airline fares and household furnishings, the Labor Department report showed.
"With activity growth below potential and job growth below its breakeven pace, the case for (rate) cuts has become much clearer," Goldman Sachs analysts said in a recent note.
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Why does the US use secondary sanctions, and do they work? – DW – 08/14/2025
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"Secondary sanctions do not attempt to force foreign subsidiaries to follow a sanctioning country's policies," according to John F. Forrer in a paper published by the Atlantic Council, a Washington, D.C.-based think tank. "The sanctioning country restricts its own firms and/or citizens from having commercial dealings with designated firms or individuals." The proposed US legislation would enable 500% tariffs on goods from any country that buys or sells Russian oil, uranium, natural gas and petroleum or petrochemical products. The United States is the biggest proponent of secondary sanctions. Their power stems from the importance of the US dollar on a global level and from the fear of losing access to the US market or its financial system. Since a significant amount of cross-border trade is in dollars or passes through the US banking system, this gives the country great leverage. For many countries, keeping this access is more important than doing business with sanctioned regimes. 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Many experts think they are not an effective foreign policy tool, according to Forrer, an associate professor and director of the Institute for Corporate Responsibility at the George Washington University's School of Business. "Many researchers view secondary sanctions as having all the worst attributes of economic sanctions, plus the added onerousness of potentially instigating new conflicts with allies and adversaries who object to the imposition of restrictions and economic hardship on their own industries and citizens," argued Forrer. In the end, it is difficult to say what exactly makes a country change course with so many parallel variables to take into account. "Secondary sanctions should be considered an option when designing economic sanctions, but only under a very particular set of circumstances," concluded Forrer. "As with any economic sanction, if deployed incorrectly, they can do more harm than good." 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Int'l Business Times
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