US inflation report shows deepening impact of tariffs

It provides a clear sign that businesses are more readily passing on costs to customers

- Colby Smith

NEW YORK - Inflation in the US rose in July, as President Donald Trump's tariffs intensified price pressures across a wider range of consumer goods and services.

The consumer price index (CPI) held steady at 2.7 per cent against the same period in 2024. On a monthly basis, prices rose 0.2 per cent from June. But an important gauge tracking underlying inflation accelerated more rapidly.

The so-called core CPI, which strips out volatile food and energy prices, jumped 0.3 per cent over the month, or 3.1 per cent on a year-over-year basis. That is the fastest annual pace in five months. In June, core inflation rose 0.2 per cent from the previous month, or 2.9 per cent from July 2024.

The July data released by the Bureau of Labour Statistics provides a clear sign that businesses are more readily passing along tariff-related costs to their customers after a prolonged period in which price gains were muted.

US firms that import products have largely been able to hold off raising prices despite a 10 per cent tariff that has been in place on all imports since April, along with higher tariffs on steel, aluminum and products from China and Canada. Mr Trump's more punishing tariffs on individual countries went into effect on Aug 7, so they were not reflected in the July data.