Tariffs Ignite Inflation Concerns Amid Complex US Economic Landscape

US inflation remained steady in July despite underlying pressures from rising import costs due to tariffs, elevating core inflation to a five-month high. Gas and grocery prices declined, but tariffs are raising costs on imported goods. The economic landscape is further complicated by political tensions and staffing issues at the Bureau of Labour Statistics.

In July, the US inflation rate held steady while underlying inflation reached a five-month peak as tariffs on imported goods exert upward pressure on prices. This occurred even as gas and grocery prices cooled, highlighting the intricate economic dynamics at play.

The Labour Department reported a 2.7% rise in consumer prices, consistent with the previous month. Core prices, excluding food and energy, jumped to 3.1%, surpassing the Federal Reserve's 2% target. The data reveals that slowing rent increases and cheaper gas offset some effects of President Trump's broad tariffs. Businesses are absorbing part of the tariff costs.

Political tension flares as President Trump replaces the head of the Bureau of Labour Statistics amidst turbulent staffing cuts. Economists warn of potential volatility in inflation reports due to reduced data collection, anticipating consumers will bear more trade-war costs. Despite expectations, import prices haven't significantly dropped, affecting consumers and prompting companies to increase retail prices.

(With inputs from agencies.)