Underlying inflation heated up in July in a more concrete sign that President Trump’s tariffs are starting to weigh on prices.
The Consumer Price Index rose 2.7% in July compared to the year before, remaining flat from June, the Labor Department said Tuesday.
But core CPI – which strips out volatile food and energy prices – heated up to 3.1% year-over-year. That’s above expectations of a 3% pace and higher than its 2.9% reading from June.
It’s the first batch of data since Trump abruptly fired Bureau of Labor Statistics chief Erika McEntarfer following a dismal economic report that revealed the labor market has been weakening for months.
The president plans to nominate E.J. Antoni, a longtime critic of the Bureau of Labor Statistics and chief economist at the conservative Heritage Foundation, to run the department.
For months, US businesses have been bearing the brunt of Trump’s tariffs – taking around 64% of the hit, Goldman Sachs economists said in a report this week.
But July’s data signals that these firms may have reached a point of no return where they are forced to pass additional tax costs along to the consumer in the form of price hikes.
Major companies have warned of incoming price hikes on everything from luxury cars to everyday goods like toilet paper and razors due to multi-million and even billion-dollar tariff impacts.
