US inflation continued its upward trend in July, with consumer prices 2.7% higher than a year earlier, according to the latest Consumer Price Index (CPI) data released Tuesday.
The increase comes as U.S. President Donald Trump’s sweeping tariffs, including a 10% universal import tax, begin to filter through to consumer costs.
Although headline inflation held steady from June, core inflation, which strips out volatile food and energy prices, rose 3.1% over the past month, outpacing June’s rate.
Economists say this uptick signals that tariff-driven cost pressures are starting to take hold across the economy.
Food prices rose 2.9% over the past year, driven largely by a 3.9% jump in restaurant and takeout costs. Prices for used cars, housing, and medical care also climbed faster than the overall inflation rate, compounding the cost burden for households.
Energy prices offered some relief, falling 1.6% year-on-year, which economists suggest helped prevent inflation from accelerating more sharply.
While new tariffs on China were delayed for 90 days on August 7 to allow for negotiations, companies like Walmart, Nike, and Macy’s have already warned that costs will be passed on to consumers.
The tariffs’ impact has extended beyond prices to jobs. A major revision earlier this month slashed reported job gains for May and June from 291,000 to just 33,000, signaling unexpected labor market weakness.
This dual challenge, rising inflation and slowing job growth, has placed the Federal Reserve in a policy dilemma.
While Trump has demanded immediate interest rate cuts, Fed officials have resisted, citing uncertainty over tariff impacts.
Trump has escalated attacks on economic institutions, firing Bureau of Labor Statistics commissioner Erika McEntarfer after July’s weak jobs report and nominating economist EJ Antoni to the role.
On social media, he insisted tariffs have not caused inflation, instead boasting of “massive amounts of CASH” flowing into the Treasury.
Trump also revived his feud with Fed Chair Jerome Powell, urging immediate rate cuts and even threatening legal action over building renovations.
