Topline
Consumer prices rose slower than expected last month as President Donald Trump’s tariffs gripped markets, according to federal data released Tuesday, as hope remains for a possible interest rate cut by the Federal Reserve.
Consumer prices rose 2.7% last month from July 2024 and increased 0.2% between June and July, the Bureau of Labor Statistics reported Tuesday, lower than economist estimates of 2.8%, according to FactSet.
Core consumer prices, an economic reading cutting out the more volatile food and energy categories, rose 3.1% year-over-year and 0.3% from June to July, above projections for a 3% and 0.2% increase, respectively.
A lighter-than-expected inflation report preceded a slight rally among the major indexes in premarket trading, as futures for the Dow Jones Industrial Complex (up 0.61%), S&P 500 (0.1%) and Nasdaq (0.47%) rose slightly.
Though inflation remains above the Fed’s 2% goal, investors have expressed optimism for an interest rate cut at the agency’s next policymaking meeting in September. There are 90.1% odds of a quarter-point reduction, according to CME’s FedWatch tool, and even higher chances (96.9%) for an easement in October. The Fed held interest rates between 4.25% and 4.5% in July, though two Fed governors voted in favor of a quarter-point cut, marking the first pair of dissenting votes in decades. Fed Chair Jerome Powell, who has faced pressure from Trump to lower rates, said the U.S. economy was in a “solid position,” but noted the effects of tariffs on the economy and inflation “remain to be seen.”
Trump on Monday nominated E.J. Antoni, an economist at the Heritage Foundation, as the next commissioner for the BLS. Antoni was a public critic of former BLS chief Erika McEntarfer, who was ousted by Trump earlier this month, calling her “incompetent” after the agency released disappointing numbers in its monthly jobs report. Jason Furman, who served as chair of President Barack Obama’s Council of Economic Advisers, wrote on X that Antoni is “completely unqualified, adding, “He is an extreme partisan and does not have any relevant expertise.”
The latest economic report comes as Trump aims criticism at the BLS for recent data on jobs and inflation, claiming the agency has altered economic readings to benefit Democrats. The BLS reported just 73,000 nonfarm jobs were added in June, well below economists’ projections, and that unemployment increased slightly to 4.2%. Trump alleged the jobs report was “RIGGED in order to make the Republicans, and ME, look bad,” calling the release a “TOTAL SCAM.” Annual inflation readings for July also follow core personal consumption expenditures (PCE) price index data, an inflation reading viewed more favorably by the Fed, which indicated prices rose 2.6% the prior month.