US inflation ticks down to 2.7% in July

The latest data from the US Bureau of Labor Statistics (BLS) shows that inflation in the United States slowed slightly in July, with the Consumer Price Index (CPI) rising by 0.2% on a seasonally adjusted basis. Over the past 12 months, the CPI increased by 2.7%, slightly below June’s figure of 2.8%.

Those figures surpassed economists’ expectations. Most analysts forecasted a modest increase of 0.2% for July, with the annual rate remaining at 2.8%. Instead, inflation slowed slightly, bolstered by stable prices in key sectors and declining energy costs.

The report indicates that core inflation — which excludes volatile food and energy prices — rose 0.3% in July, exactly in line with forecasts. Over the last year, core CPI has risen 3.1%, remaining within a manageable range for policymakers and consumers alike. Grocery prices, meanwhile, remained steady month-over-month, with some categories experiencing decreases that eased pressure on household budgets.

Energy prices made a significant downward move, with gasoline prices dropping 2.2% in July — nearly 10% lower than last year — and fuel oil down 2.9%. Egg prices continued their long decline, falling 20% since President Trump’s administration took office. Overall, energy commodities declined by 9% over the past year, reflecting an ongoing easing in prices that has provided relief to American consumers.

Further easing came in shelter costs — the largest contributor to overall inflation — which hit their lowest level since October 2021.

State-specific data for July is not available yet. But data from June for the Southeastern region, which includes North Carolina, showed that the region experienced a 0.1% increase in prices, slightly below the 0.2% for the country as a whole.

For July, the Bureau also released new figures on wage growth, which continue to paint a positive picture for American workers. Real wages increased in July, with earnings up 1.3% compared to last year. This growth outpaces inflation and signals a trend of rising purchasing power amid an environment of steady inflation.

“Today’s CPI report revealed that inflation beat market expectations once again and remains stable, underscoring President Trump’s commitment to lower costs for American families and businesses,” said White House Press Secretary Karoline Leavitt in a statement. “The Panicans continue to be proven wrong by the data — President Trump’s tariffs are raking in billions of dollars, small business optimism is at a five-month high, and real wages are rising. The American people have rightfully put their trust in President Trump’s America First agenda that is Making America Wealthy Again.”

Despite ongoing debates about the impact of tariffs, many experts agree that the recent inflation data does not yet reflect the full effects of recent trade policies. Some economists warn against prematurely attributing the inflation slowdown to tariffs.

The BLS also released new figures on wage growth. Real wages increased in July, with Americans’ earnings up 1.3% over last year — outpacing inflation and continuing a trend of rising real incomes.

Many economists have been expecting the inflationary impact of Trump’s tariffs policy to come through in new inflation data, but so far that result has been muted.

“Trying to tie overall inflation trends to Trump’s tariffs is both premature and off base. It’s premature because many of the tariffs didn’t even take effect until Aug. 7, after the latest CPI number was calculated,” said Brian Balfour, senior vice president of research at the John Locke Foundation. “Moreover, it’s off base because overall inflation is a reflection of monetary policy, not tax policy. Inflation is caused by an increase in the money supply, whereby more dollars are chasing the economy’s goods and services. The more relevant measure is how tariffs impact the prices of those items being tariffed along with the prices of the finished goods that utilize inputs subject to the tariffs.”

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