Economists Eye Tariff-Driven Price Gains in July's US CPI Data
- Headline CPI expected to rise to 2.8% y/y; core seen at 3.0% - Tariff pass-through likely to show more clearly in coming months - Vehicle price declines may offset goods price acceleration - Data integrity questions persist after BLS leadership shake-up
- Report scheduled for release at 12:30 GMT/08:30 EST
Headline inflation is forecast to rise in July as tariff-induced price pressures become more apparent, experts say.
Economists expect the annual headline CPI to rise 2.8% y/y in July, up from 2.7% in June. Core inflation, which excludes volatile food and energy prices, is projected to edge up to 3.0% y/y from 2.9%. On a monthly basis, the headline rate is seen slowing to 0.2% from 0.3%, while core inflation is expected to quicken to 0.3% after a 0.2% gain in June.
Last month, the US Bureau of Labor Statistics (BLS) said shelter remained the most significant contributor to the monthly increase, with energy prices also adding upward pressure. Excluding food and energy, gains were reported in household furnishings, medical care, recreation, apparel, and personal care, while prices for used and new vehicles, as well as airline fares, fell.
Analysts previously saw limited evidence of tariff effects in the data, but many expect a larger impact this month following the administration’s push for more favourable trade terms.
Price contributions
Economists say a tariff-related acceleration in goods prices in July is possible but could be tempered by further declines in vehicle prices. Rising airfares are also expected to contribute to an uptick in core services ex-housing.
In June, the so-called super-core CPI — which strips out all goods, food, energy, and housing — rose an unrounded 0.212% m/m, the highest since February, up from 0.06% in May. On a y/y basis, the rate picked up to 3.017% from 2.862%.
Tariff pass-through
Morgan Stanley said June CPI data showed early signs of tariff-driven inflation, but history suggests a three-to-five-month lag for the full impact to appear. Much of the delay stems from supply chain realities, the bank said, citing the gap between effective tariff rates and announced ones.
In May, the effective tariff rate — calculated from actual collections and imports — was 8.7%, rising slightly to 8.9% in June, both well below the announced rates of more than 15%. Several economists expect the price impact to become more material from August through September.
Data integrity concerns
The accuracy of official statistics has also come under scrutiny. Last Friday, President Donald Trump dismissed BLS Commissioner Erika McEntarfer after accusing her agency of “faking” jobs data to aid a political rival — an allegation yet to be substantiated.
Separately, BofA’s US economics team noted CPI data has faced increased reliance on “different cell imputations” — where uncollected prices are estimated using data from other regions or related items — due to suspended collections in some areas and a 15% cut in sample coverage across the remaining 72 areas.
“Still, we do not think the BLS’s decision to reduce the CPI sample is enough to warrant alarm over the signal from the inflation data,” the bank said.
Source: US Bureau of Labor Statistics | BofA Global Research
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- Headline CPI expected to rise to 2.8% y/y; core seen at 3.0%
- Tariff pass-through likely to show more clearly in coming months
- Vehicle price declines may offset goods price acceleration
- Data integrity questions persist after BLS leadership shake-up
- Report scheduled for release at 12:30 GMT/08:30 EST
By Harry Daniels
LiveSquawk News
@HarryDaniels71
11 August 2025 | 14:15 GMT
Headline inflation is forecast to rise in July as tariff-induced price pressures become more apparent, experts say.
Economists expect the annual headline CPI to rise 2.8% y/y in July, up from 2.7% in June. Core inflation, which excludes volatile food and energy prices, is projected to edge up to 3.0% y/y from 2.9%. On a monthly basis, the headline rate is seen slowing to 0.2% from 0.3%, while core inflation is expected to quicken to 0.3% after a 0.2% gain in June.
Last month, the US Bureau of Labor Statistics (BLS) said shelter remained the most significant contributor to the monthly increase, with energy prices also adding upward pressure. Excluding food and energy, gains were reported in household furnishings, medical care, recreation, apparel, and personal care, while prices for used and new vehicles, as well as airline fares, fell.
Analysts previously saw limited evidence of tariff effects in the data, but many expect a larger impact this month following the administration’s push for more favourable trade terms.
Economists say a tariff-related acceleration in goods prices in July is possible but could be tempered by further declines in vehicle prices. Rising airfares are also expected to contribute to an uptick in core services ex-housing.
In June, the so-called super-core CPI — which strips out all goods, food, energy, and housing — rose an unrounded 0.212% m/m, the highest since February, up from 0.06% in May. On a y/y basis, the rate picked up to 3.017% from 2.862%.
Morgan Stanley said June CPI data showed early signs of tariff-driven inflation, but history suggests a three-to-five-month lag for the full impact to appear. Much of the delay stems from supply chain realities, the bank said, citing the gap between effective tariff rates and announced ones.
In May, the effective tariff rate — calculated from actual collections and imports — was 8.7%, rising slightly to 8.9% in June, both well below the announced rates of more than 15%. Several economists expect the price impact to become more material from August through September.
The accuracy of official statistics has also come under scrutiny. Last Friday, President Donald Trump dismissed BLS Commissioner Erika McEntarfer after accusing her agency of “faking” jobs data to aid a political rival — an allegation yet to be substantiated.
Separately, BofA’s US economics team noted CPI data has faced increased reliance on “different cell imputations” — where uncollected prices are estimated using data from other regions or related items — due to suspended collections in some areas and a 15% cut in sample coverage across the remaining 72 areas.
“Still, we do not think the BLS’s decision to reduce the CPI sample is enough to warrant alarm over the signal from the inflation data,” the bank said.