Does the latest US Consumer Price Index (CPI) report show that Americans pay more or less for their products? You may see mixed messaging based on the politician you are listening to, or what social media algorithms represent.
Some say the numbers show President Donald Trump’s success. Others say the opposite.
Each month, the Federal Bureau of Labor Statistics issues a Consumer Price Index. The Consumer Price Index measures changes in the prices of goods and services, such as food, apparel, gasoline, and homes. This report is used to assess economic stability and to inform policy decisions.
Florida Republican Sen. Rick Scott celebrated his July report on the release date.
“Another month of lighter inflation than expected. It’s great news for Florida families and another reminder to trust the press. Trump!” Scott posted on X on August 12th, along with a short Fox business clip that lowers energy and gas prices.
US representative Kathy Caster, a Democrat from Florida, had a different view.
“Trump is putting up a grocery bill to line up the wallets of his billionaire friends. There’s nothing great about this for American families across the country.”
The economist told Politifact that this confused framing is not new and that people from various political tribes use different indicators to reinforce their opinions. They said the big picture on the health and trajectory of the economy needs more time to focus.
Overall, the report’s figures are “another dose of modest bad news,” said Douglas Holtz Arkhun, president of the Center Light Policy Institute America Action Forum. “It’s not dramatic yet, it’s not a crisis, but it’s not positive.”
Trump’s tariffs, which are widely viewed to see how they affect consumer prices and inflation, are still new, with some people only just coming into effect in August.
“Since at least 2021, CPI reports have become a partisan battlefield. Cherry chooses data to best support their arguments,” said Jason Furman, an economist and professor at Harvard’s John F. Kennedy School, previously serving as economic adviser to former President Barack Obama. “And because CPI reports have so much data, there’s always a way to slice and dice to support almost every view.”
CPI Reports and their Meaning
In July, CPI increased by 0.2% compared to the previous month, and 2.7% from a year ago. Thanks to the decline in gasoline and energy prices, this is slightly cooler than the 2.8% forecast by rising economists.
Gary Verteles, a senior fellow at the Brookings facility, said the 12-month rise of 2.7% in consumer prices for all items was “a little lower than early 2025” for Trump’s profits. But the number is also slightly higher than those from March to July, he said, in favor of Trump critics.
A separate measure, core inflation – which excludes food and energy because they are considered volatile measures prone to large, rapid fluctuations – increased 0.3 percent for July and 3.1 percent from a year ago. A separate measure, core inflation – which excludes food and energy because they are considered volatile measures prone to large, rapid fluctuations – increased 0.3 percent for July and 3.1 percent from a year ago. This surpassed the Federal Reserve forecast prior to the 2024 election, predicting a median inflation of 2.2% in 2025.
“Economists tend to focus on their core because they are less volatile than food and energy prices,” said Dean Baker, co-founder of the Center for Liberal Economic Policy Research. “Food and energy prices are very important, but there is a tendency for major changes to reverse in both directions. So, if you’re looking for future trends to look at the core index, it’s often more useful.”
Despite the rise, the report was mild enough for investors as US stocks closed near record highs on August 12th. For now, the stock market appears to be focusing on the possibility that the Federal Reserve will cut interest rates in September, given concerns about the cooling labor market. Central bank officials are stable in 2025 as they wait for tariffs to see the economic impact in 2025 due to Trump’s disapproval.
The July data comes amid reforms from the Bureau of Labor Statistics. After the agency revised its May and June employment data downwards, Trump fired director Erica Mantelfer and denounced her for political bias. Trump has appointed Eji Antoni, an economist with the Conservative Heritage Foundation, who criticized the bureau as the station’s new commissioner.
The long winding road of Trump’s tariffs
As the Trump administration has so far highlighted nearly $130 billion in collection from new tariffs, many economists expect businesses to pass additional costs to U.S. customers.
Goldman Sachs estimated in an analysis shared with Bloomberg that US companies have absorbed most of their taxable costs so far, while consumers absorbed about 22% of their costs through June.
However, Goldman Sachs said it expects consumer share of costs to skyrocket by October to 67% by October if it follows the previous pattern of how import taxes affected prices.
Trump wrote in his Truth Social Post on August 12th that Goldman Sachs CEO David Solomon should replace the economist. “Even in this later stage, tariffs have proven that they have not caused inflation or other issues other than pouring large amounts of cash into our Treasury funds,” Trump wrote.
Some US companies avoid passing higher prices on stock items prior to customs implementation. Others refrain from absorbing costs and hoping that the court will eliminate tariffs to avoid losing customers.
“It’s a business that makes business decisions,” said Holtz-Aeakin of the American Action Forum. “But if the tariffs remain at the current level, there’s a point where it may not be more viable.”
Many previous studies on tariffs have shown that it can harm the economy and increase consumer prices.
But for now, experts agree that the US economy is in a moment of waiting.
Brookings’ Barteles believes that the impact of tariffs on consumer prices has been modest to date, and price increases across various categories of goods and services “contradicts the idea that tariffs are the main driver of overall inflation.”
“It might turn out to be that way in the future,” he said, “it’s not the case yet.”
Holtz-Aeakin also warned that there was too much stock in a single report.
“Don’t believe in the data for a month,” he said. “If you’re doing policy work, that’s the rule of life.”
