US inflation held steady in July at 2.7%, falling short of economists’ expectations of a slight surge off the back of President Donald Trump’s new tariffs, which came into effect last week.
However, core inflation data — which excludes volatile food and energy costs — rose to 3.1%, the highest in five months, reflecting that Trump’s tariffs had pushed some businesses to start raising prices.
“We may not be seeing the tariff pass-through to the degree initially feared,” one portfolio manager told Bloomberg. “But it’s early in the process, so I’d be cautious not to jump to any conclusions based on this print,” he added.
S&P 500 futures climbed on the result, and the dollar tumbled, suggesting that traders appear confident in the long-term strength of the US economy and the probability that the Federal Reserve would cut interest rates in September.
The report is the first major release from the Bureau of Labor Statistics since Trump fired the agency’s chief following a weak jobs report. On Monday, Trump said he would nominate E.J. Antoni, a loyalist from the rightwing Heritage Foundation, as a replacement.