Consumer prices rose 2.7% annually, inflation report shows

(NewsNation) — Inflation ticked upward in July, rising 0.2% for the month and 2.7% for the year, according to Tuesday's Consumer Price Index report, which landed at a critical time for the U.S. economy.

Although July consumer prices rose from a year earlier, they remained unchanged from the previous month, still above the post-pandemic low of 2.3% in April. Overall, the measure of inflation increased slightly less than expected in July.

Core inflation rises to 3.1%

Excluding the volatile food and energy categories, core prices rose 3.1%, up from 2.9% in June.

The figures suggest that slowing rent hikes and cheaper gas are offsetting some of the impact of President Donald Trump's sweeping tariffs. Tuesday's report likely reflects the 10% universal tariff Trump imposed in April, as well as higher duties on countries such as China and Canada.

Tuesday's report comes as markets are weighing a more challenging job market and mounting "stagflation" concerns.

Stagflation refers to an economy with little to no growth and higher-than-normal inflation. The U.S. has seen it happen before in the 1970s, when the so-called misery index, or the sum of inflation and unemployment, reached 19.9%.

CPI report closely watched by the Fed

The Federal Reserve closely monitored Tuesday's report, which pushed inflation further from Fed chair Jerome Powell’s 2% annualized inflation goal — the threshold he set before he said the Central Bank will cut interest rates, a decision expected next month.

Trump has repeatedly pressured Powell to lower rates and has called him “stupid” for holding off.

Labor Statistics shake-up puts trust in data at risk

The report served as a test of investors' trust in U.S. economic data after Trump's unprecedented dismissal of the Bureau of Labor Statistics commissioner Erika McEntarfer earlier this month over a weaker-than-expected jobs report.

In June, consumer prices rose 2.7% from a year earlier, up from an annual increase of 2.4% in May. On a monthly basis, prices climbed 0.3% from May to June, after rising just 0.1% the previous month.

Trump accused McEntarfer of “rigging” the numbers to make Republicans “look bad,” a move critics say could undermine the integrity of U.S. economic data.

Trump extends China tariff truce 90 days

Trump signed an executive order Monday, granting a 90-day extension for the U.S. to reach a trade deal with China.

Under the deal, most U.S. tariffs on Chinese goods remain at 55%, in exchange for a commitment from Beijing to boost rare mineral exports to the U.S. and cap tariffs on American goods at 10%.

"We've been dealing very nicely with China, as you probably have heard," Trump said Monday. "They have tremendous tariffs that they're paying to the United States of America, and we'll see what happens. The relationship is very good with President Xi and myself."

The deal gives the two countries another 90 days to reach a permanent solution that would avoid
a trade war and threaten a recession.

The Associated Press contributed to this report.