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The Consumer Price Index in July rose 2.7% on an annual basis, slightly cooler than economists had forecast.
The CPI was expected to rise 2.8% last month, according to economists polled by financial data firm FactSet.
On a month-over-month basis, the CPI rose 0.2%, in line with economists' forecasts.
The CPI, a basket of goods and services typically bought by consumers, tracks the change in prices on everyday items such as food and apparel over time. So far this year, inflation has stayed at 3% or lower, with at 2.7%, above the
So-called core inflation, a measure or CPI that excludes food and energy prices (which are more volatile), rose by 3.1% over the past 12 months, the highest level in five months. Economists polled by FactSet had predicted a 3% increase for that measure.
Overall food prices in July rose 0.2% from the previous month, and 2.9% over the past year. The cost of groceries last month rose 0.1% since June and 2.2% on an annual basis.
The data comes as about half of Americans say the is a in their life right now, while 33% say it's a "minor" source of stress, according to the poll from The Associated Press-NORC Center for Public Affairs Research. Only 14% say it's not a source of stress, underscoring the pervasive anxiety most Americans continue to feel about the cost of daily food essentials.
Everyday staples that saw significant cost increases in July include coffee, up 2.6% from June and 14.8% from 2024. Ground beef, rose 2.4% from June and 11.5% from 2024. On a positive note, egg prices fell 3.4% from June, but were still 16.4% higher than they were in July of last year.
Eating out continues to grow more costly as restaurant prices in July increased 0.3% from the previous month and 3.9% since 2024.
The data comes as fast-food restaurants continue to report declines in traffic, as higher prices Wendy's, for example, cut its sales outlook , pointing to heightened competition and economic uncertainty weighing on its customer base.
Fast-food chains like Wendy's are competing for the attention of low-income consumers who have pulled back on eating out over concerns about the economy. According to a May study from , among households earning less than $50,000 per year, 44% say they expect to spend less on dining out this year than they did last year.
"The low-income consumer remains under pressure," Sara Senatore, a research analyst at Bank of America, recently told CBS MoneyWatch.
Gasoline prices, meanwhile, fell 0.5% from June and 9.5% from July 2024, the CPI data shows.
Economists have been watching closely to determine how tariffs might trickle through to the CPI data. For the first several months of the year, the impact appeared to be limited, but indicated that the levies might be starting to drive up prices in certain categories such as apparel, home furnishings and appliances.
Goods from more than 60 countries and the European Union are now subject to a that went into effect on Aug. 7.
The figures from today's CPI report suggest that while the prices of certain imported goods such as shoes and furniture rose from June to July, the cheaper cost of gas is offsetting some of the impact of President Donald Trump's sweeping tariffs.
"There is some sign of tariff pass through to consumer prices but, at this stage, it is not significant enough to ring alarm bells," Seema Shah, chief global strategist a Principal Asset Management, said in an email to TheNews after today's CPI report was released.
During a call with media yesterday, Alan Detmeister, an economist at UBS, said the investment bank expects consumers will start to see the direct effects of the tariffs this year or into early next year.
"It's possible that these tariff-induced price increases are a one-time price level shock that will start coming down early next year," said Detmeister. "We think they're going to be much more lasting."
Detmeister expects both core and headline CPI to peak in the second quarter of 2026, with headline CPI at 3.7% and core CPI at 3.8%.
With the CPI in July rising to annualized rate of 2.8%, inflation remains above the Fed's 2% target rate, however, most analysts say that the possibility of a Fed rate cut in September is likely still on the table.
"Although core annual inflation is back to its highest level since February, today's CPI print is not hot enough to derail the Fed from cutting rates in September," said Shah.
The latest jobs report showed that, which could bolster the case for a Fed rate cut.
The Fed's mandate is to maintain maximum employment, while keeping prices down. Otherwise, the country — which is when high inflation is coupled with high unemployment.
More economic data — in the form of another CPI and jobs report — is expected next month, which will inform the central bank's decision.
FactSet gives an 88% probability of a rate cut at the meeting, which is scheduled for Sept. 16 to 17.
