Playbook PM: 3 big questions from the latest inflation numbers

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THE CATCH-UP
INFLATION NATION: The latest monthly inflation report from the Department of Labor's Bureau of Statistics shows that inflation rose slightly in July, as the effects of President Donald Trump's global tariff battle begin to trickle down.
On the numbers: The Consumer Price Index — a key inflation measure — stayed steady at 2.7 percent compared to last July, holding slightly below the 2.8 percent rise expected by some economists. The price of shelter rose 0.2 percent in July and 'was the primary factor in the all items monthly increase,' the report notes. Though the food index remained unchanged from last month, energy prices dropped 1.1 percent while gas prices decreased 2.2 percent.
The broader takeaway: The report also shows the so-called core inflation rate rose 3.1 percent over the past year — slightly above forecasts of a 3 percent increase. Though small, the uptick represents 'one of the largest monthly increases so far this year and represents the fastest annual pace in five months,' NYT's Colby Smith reports.
WHAT'S NEXT FOR CONSUMERS? The increase is a notable sign of businesses imparting tariff-related costs on to buyers, POLITICO's Sam Sutton reports. Experts expect rising prices could be around the corner as Trump's tariff battle continues. 'With the administration touting the nearly $130 billion collected from new import levies — and with new, heavy-duty taxes on goods from dozens of trading partners now in effect — there is a broad expectation that more companies will saddle consumers with the additional costs in the coming months,' Sam writes.
WHAT'S NEXT FOR THE FED? Federal Reserve officials are expected to lower rates at their next September meeting, after embracing a muted approach to hikes and watching how tariff-related price increases play out. Still, Trump doubled down on his threats today against Fed Chair Jerome Powell, whom he has mused about firing over his cautious take on rate increases.
The central bank leader 'must NOW lower the rate,' Trump wrote on Truth Social. 'The damage he has done by always being Too Late is incalculable. Fortunately, the economy is sooo good that we've blown through Powell and the complacent Board.' Trump also directed a barb toward Steven Mnuchin, his first Treasury secretary, who the president said 'really gave me a 'beauty' when he pushed this loser,' referring to Powell.
Trump added that he was considering allowing a 'major lawsuit' against Powell 'to proceed because of the horrible, and grossly incompetent, job he has done in managing the construction of the Fed Buildings.'
Meanwhile: Administration officials are reportedly expanding the pool of names to replace Powell after his term as chair expires next year, broadening the 'search for someone who can garner the trust of both the president and financial markets,' POLITICO's Victoria Guida reports. 'The list suggests officials are aiming to present … a diverse set of options to replace Powell, whom Trump has relentlessly pressed to lower interest rates, and they aren't ruling out picking a Fed insider for the job.'
The who's who: 'Among the people under consideration: current Fed Vice Chairs Philip Jefferson and Michelle Bowman; Dallas Fed President Lorie Logan; former St. Louis Fed President Jim Bullard, and macro consultant Marc Sumerlin … More private sector names were also likely to be considered.' They join National Economic Council Director Kevin Hassett, former Fed board member Kevin Warsh and current Fed board member Christopher Waller as contenders to take the job.
WHAT'S NEXT FOR THE DATA? E.J. Antoni, the conservative economist Trump has tapped to head up BLS after firing the previous commissioner, 'suggested suspending the agency's closely watched monthly jobs report, arguing that its underlying methodology, economic modeling and statistical assumptions are fundamentally flawed,' in an interview with Fox Business' Amanda Macias. 'Antoni criticized the data behind the monthly jobs report as unreliable and frequently overstated, warning that it misleads key economic decision-makers from Washington to Wall Street.'
What he said: 'How on earth are businesses supposed to plan – or how is the Fed supposed to conduct monetary policy – when they don't know how many jobs are being added or lost in our economy? It's a serious problem that needs to be fixed immediately,' Antoni told Fox Business.
Good Tuesday afternoon. Thanks for reading Playbook PM. Drop me a line at [e-mail].
7 THINGS YOU NEED TO KNOW
1. RUSSIA-UKRAINE LATEST: As the world waits for Trump's meeting with Russian President Vladimir Putin in Alaska on Friday, European leaders are set to hold a private call tomorrow with Ukrainian President Volodymyr Zelenskyy before then speaking with Trump and VP JD Vance in a virtual meeting, per NBC News. What to expect: The leaders are looking to ramp up pressure for a ceasefire and reiterate their own conditions for any agreement. A third call is also scheduled between Zelenskyy and 'representatives from a coalition of countries supporting Ukraine,' including the U.K. and Canada, though 'Trump and Vance are not expected to be on the third call.'
The view from Moscow: Russian commentators are lauding the Kremlin's historic ties to Alaska — which Russia sold to the U.S. in 1868 — as an olive branch 'suggesting it could strengthen relations between the two nations,' NBC's Freddie Clayton reports. But on the ground in Ukraine, the genial approach has done nothing to quell Russia's continued advancement. Kremlin forces have moved several miles into Ukrainian-held territory near the city of Pokrovsk in recent days, encircling the longtime Ukraine stronghold with troops, NYT's Constant Méheut reports from Kyiv.
2. THE D.C. DEPLOYMENT: As local officials and lawmakers continue to grapple with the best way to respond to Trump's show of force in D.C., WaPo's Alex Horton and David Ovalle scoop that the latest deployment could be a precursor for a broader plan from the Pentagon that would require hundreds of National Guard troops 'to be ready round-the-clock' for rapid deployment into cities across the U.S.
Internal Pentagon documents show that the Department of Defense is considering establishing a 'Domestic Civil Disturbance Quick Reaction Force' that would require '600 troops to be on standby at all times so they can deploy in as little as one hour.' Unlike teams that would deploy in their home states, the force 'would entail moving troops from one state to another' under presidential directive.
Meanwhile, in Washington: D.C. Mayor Muriel Bowser met with AG Pam Bondi and other top Trump administration officials this morning to discuss the logistics of Trump's moves, which Bondi described as 'productive' on X. And Interior Secretary Doug Burgum posted photos to X that show him meeting with Park Police officers, along with FBI Director Kash Patel and DEA Administrator Terry Cole.
3. THE DOGE DAYS AREN'T OVER: A federal appeals court overruled a lower court decision today that had blocked teams from the Department of Government Efficiency from accessing potentially sensitive data on millions of Americans, NYT's Zach Montague reports. Citing the Supreme Court's June decision on a similar case, judges ruled 2-1 that DOGE staff could have 'high-level I.T. access' to information from the Treasury and Education departments and the Office of Personnel Management. The data includes 'addresses, employer details and related statistics' collected by the government, as well as 'personal financial data on more than 40 million borrowers' of student loans.
4. DEEP IN THE HEART: Everything's bigger in Texas, including the numbers the Senate Leadership Fund says will be necessary to keep longtime incumbent Sen. John Cornyn (R-Texas) from being ousted in November, Punchbowl's Ally Mutnick, Andrew Desiderio and John Bresnahan scoop. In a slide deck for private donors, the top GOP super PAC noted it would cost between $25 to $70 million to help Cornyn secure a GOP nomination in lieu of state AG Ken Paxton.
But the bill goes higher: Paxton — who's seen by some in the party as a risky candidate — would require '$200 million to $250 million to save Paxton in the general election.' SLF is urging a rapid fundraising effort and a tight timeline to get things in order: 'The not great news: this is an expensive state with an early timeline. Resources will need to be committed starting this August,' the deck reads.
So far, polling has consistently shown Cornyn facing a steep hill against Paxton in a primary — and it's only getting worse. 'Cornyn now trails Paxton by 17 points in an average of 13 public and private polls,' according to the SLF presentation. And despite his history as an institutional Republican in the state, 58 percent of Republican primary voters in the Lone Star State 'don't believe Cornyn is conservative.'
5. BUCKEYE BOUNCEBACK?: After flirting with a reelection run for weeks, former Sen. Sherrod Brown has decided to mount another bid after he lost his seat in a savagely fought campaign against Republican Bernie Moreno last year, the Cleveland Plain Dealer's Jeremy Pelzer reports. Democrats see Brown as their best hope of unseating incumbent GOP Sen. Jon Husted, who was appointed by the governor after Vance vacated his seat after ascending to the vice presidency.
Brown 'was a top recruit for Senate Democratic leaders' for 2026 and is likely to clear the primary field as the lone Democrat to run, POLITICO's Holly Otterbein and Gregory Svirnovskiy report. Though the election is 14 months out, Brown's name recognition could certainly help him in the battleground state. Despite losing to Moreno by more than 200,000 votes in 2024, Brown ran nearly 8 points ahead of the top of the ticket. UVA's Sabato's Crystal Ball has accordingly adjusted the race rating from 'likely' to 'lean' Republican.
6. ON THE MAP: With the Republican-led redistricting effort in Texas creating a ripple effect across the country, the DNC and more than three-dozen groups are planning events across 20 states on Saturday to protest the Lone Star State's mid-decade redistricting effort, NBC's Megan Lebowitz reports. 'The main rally will take place at the Texas state Capitol in Austin, according to Texas For All, one of the lead organizers.'
The demonstrations, dubbed 'Fight the Trump Takeover,' come as Texas state lawmakers continue their standoff — with Texas' Democrat quorum break preventing a vote on the maps. With the current Texas special session at a standstill, Lt. Gov. Dan Patrick issued a statement today announcing 'the Texas Senate will adjourn Sine Die on Friday so Gov. [Greg] Abbott can immediately call us back for another special session. This will continue in perpetuity.'
7. HISTORY HAS ITS EYES ON YOU: The White House is launching a new review of Smithsonian museums to ensure alignment with Trump's view of American history, WSJ's Meridith McGraw scoops. In a new letter sent to Smithsonian Secretary Lonnie Bunch, White House officials say they want to ensure the nation's storied museums reflect the 'unity, progress, and enduring values that define the American story' and abide by Trump's executive order for 'Restoring Truth and Sanity to American History.' The Aug. 12 letter was 'signed by White House senior associate Lindsey Halligan, the director of the domestic policy council, Vince Haley, and the director of the office of Management and Budget, Russ Vought.'
TALK OF THE TOWN
Donald Trump announced that the Kennedy Center's slate of yearly honorees will be announced tomorrow. The announcement 'caught Kennedy Center staff off guard,' per NPR.
Dana White says a UFC cage fight on the White House South Lawn 'is going to happen,' per WSJ's Jason Gay.
MEDIA MOVES — Liz Landers will be a White House correspondent for PBS News Hour. She previously was a national security correspondent for Scripps News and is a Vice News, ABC, and CNN alum. … Lindsey Granger is now co-host of The Hill's 'Rising.' She is also a NewsNation contributor, a contributing writer for Bustle and co-owner of Gilded Focus Productions.
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