Inflation increases slightly in July, Americans still paying higher prices: CEI analysis

July’s Consumer Price Index (CPI) report shows inflation increased 0.1 percent across all sectors, in line with economists’ predictions. With new proposed tariffs on the horizon and continued instability abroad creating concern, attention is again on the Fed’s anti-inflation strategy.

CEI Finance and Monetary Policy Analyst Steve Swedberg:

“While the last two months have provided Americans with some relief from relentlessly rising household costs, they are still paying the price for years of inflation. Consumer prices rose slightly in July, while the annual inflation rate remained elevated. Since January 2020, prices overall have increased by around 30 percent.

“That history matters. Even if inflation returned to the Federal Reserve’s year-to-year goal of 2 percent, the prices Americans face for groceries, housing, utilities, and other necessities will remain far higher than they were before the pandemic.

“Americans feel that pressure in their wallets. Americans’ one-year inflation expectations remained at 3.6 percent in July. Meanwhile, consumer confidence is 10 percent lower than it was last year.

“The affordability problem extends beyond the latest monthly inflation number. Families are dealing with a much higher cost of living than they faced six years ago, and continued price increases only add to that burden. Americans need more than inflation to slow down. They need policies that restore purchasing power and give people the ability to afford the very things that make life worth living.”

CEI Senior Economist Ryan Young:

“There is good news and bad news from this week’s CPI report. The good news is that the core inflation rate, which excludes volatile food and energy, is not far off target. The bad news is that tariffs and the Iran stalemate will continue to cause uncertainty and raise prices.

“There are things the Federal Reserve can control, and things it cannot control. The things it can control seem to be mostly under control.

“But if the late Sen. Lindsey Graham’s Russia tariffs bill becomes law, Congress will hand President Trump the ability to enact up to 100 percent tariffs against major trading partners such as Europe, China, and India. This would cause even sharper price increases.

“Fed Chairman Kevin Warsh has indicated that the Fed is focused on the inflation-fighting side of its dual mandate to keep both inflation and unemployment low. With the labor market still in decent shape, it should be able to continue concentrating on inflation at its next interest rate meeting. Some stability on tariffs and Iran would make that job easier.”