US Consumer Price Index shows effects of Trump’s tariffs

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

- COLBY SMITH

The Consumer Price Index stayed steady at 2.7% compared with the same time last year. On a monthly basis, prices rose 0.2% from June. But an important gauge tracking underlying inflation accelerated more rapidly.

“Core” CPI, which strips out volatile food and energy prices, jumped 0.3% over the course of the month, or 3.1% on a year-over-year basis. That is the fastest annual pace in five months. In June, core inflation rose 0.2% from the previous month, or 2.9% from July 2024.

The July data, which was released by the Bureau of Labor 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 companies that import products have largely been able to hold off raising prices despite a universal 10% tariff that has been in place on all imports since April, along with higher levies on steel, aluminium and products from China and Canada. Trump’s more punishing tariffs on individual countries went into effect last Thursday so will not be reflected in the July data.

Businesses have managed to avoid passing along price increases because of a strategy earlier in the year to stockpile goods that were likely to be subject to Trump's levies. Many companies have also sought to absorb the costs themselves in order to avoid driving away customers, some of whom are increasingly under financial strain.