Inflation likely moved higher last month as tariffs bite, putting the Fed in bind

Source: Associated Press

Inflation likely moved higher last month as tariffs bite, putting the Fed in bind

By CHRISTOPHER RUGABER
Updated 12:01 AM EDT, August 12, 2025

WASHINGTON (AP) — Inflation likely ticked up in July for the third straight month as tariffs lift the cost of imported goods such as furniture, appliances, and toys, which could make it harder for the Federal Reserve to cut short-term interest rates as President Donald Trump has demanded.

Consumer prices are forecast to have risen 2.8% in July from a year earlier, according to a survey of economists by data provider FactSet. That annual pace would be up from 2.7% in June and a post-pandemic low of 2.3% in April. Excluding volatile food and energy costs, core inflation is expected to rise to 3%, from 2.9% in June. Both figures are well above the Fed’s 2% price target.

The potential increases, while modest, would put the Fed in a difficult spot: Hiring slowed sharply in the spring, after Trump announced a sweeping set of tariffs in April. The stalling out of job gains has boosted financial market expectations for an interest rate cut by the central bank.

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Read more: https://apnews.com/article/inflation-consumer-prices-jerome-powell-fed-interest-rates-7956da9c097730929b12c269f8c08399