A retail store in Manhattan, New York. /Yonhap News
Despite concerns that the tariff policies of the Trump administration will drive up inflation, the U.S. consumer price index (CPI) for July remained at the same level as the previous month.
According to the U.S. Department of Labor on the 12th (local time), the U.S. CPI in July rose 2.7% year-on-year, the same level as in June (2.7%). Compared to the previous month, it increased by 0.2%.
Excluding the volatile energy and food sectors, the core CPI rose by 3.1% year-on-year and 0.3% from the previous month. The year-on-year increase in the core index rose from June (2.9%) to the highest level in five months since February.
The figures released were generally in line with expert forecasts compiled by Dow Jones. The year-on-year increase in the main index was 0.1 percentage points (p) below estimates, while other figures were in line with expectations.
Economic experts have been voicing concerns that the Trump administration’s tariff policies could trigger inflation. Price pressures due to tariff impacts have made the rebound in inflation particularly evident in the core index as of July.
In the previous June consumer price data, prices of some items with a high import proportion, such as toys and clothing, had risen. As of July, significant month-over-month price increases were seen in certain items such as ham (3.7%), tomatoes (3.3%), infant and children’s clothing (3.3%), and coffee (2.2%). Airline fares rose by 4.0% month-over-month as the holiday season approached. However, overall food prices remained unchanged from the previous month, and energy prices fell by 1.1%, constraining the overall representative index’s inflation rate.
Despite concerns over the core index rebound, the overall lack of a ‘surprise rebound’ in July’s consumer price inflation rate kept the financial markets calm. According to the electronic trading platform Tradeweb, the yield on 10-year U.S. Treasury bonds remained unchanged at 4.27% around 9 a.m. Eastern time. The yield on the 2-year U.S. Treasury, sensitive to monetary policy, fell by 2 basis points (1bp=0.01 percentage points) to 3.783% at the same time.