Consumer prices rose 2.7% in July from a year earlier, the Labor Department said yesterday.
The increase was below the 2.8% expected by economists, The Wall Street Journal reported. Prices, excluding food and energy, rose 3.1% during the past 12 months, exceeding forecasts of a 3% increase.
The Labor Department figures tempered concerns that tariffs would drive up prices and added momentum to the consensus among economists and financial observers that the Federal Reserve will lower rates at its September meeting. As of this morning, Fed fund markets have moved the chances of a rate decrease in September to 99.9%.
“Consumers might be taking some relief in the fact that some of their most common and most necessary purchases are seeing easing price pressures,” Bank of America senior U.S. economist Stephen Juneau said in The Wall Street Journal report.
Trump administration officials, who are pushing for rate cuts, held up the inflation report as evidence that tariff-related price pressures would continue to defy expectations. “The tariff inflation has not happened,” said Joe Lavorgna, a senior Treasury Department adviser, as quoted in the WSJ. “And if it does happen at some point, it is going to be much softer.”
