Inflation expected to rise in July CPI release as tariffs impact consumer prices

The Ministry of Labor will issue the latest monthly inflation report on Tuesday at a critical time for the economy, as the Federal Reserve will evaluate the impact of definitions on consumer prices before the interest rate decision next month.

The Bls Statistics Office (CPI) will issue for the month of July on Tuesday morning, which is expected to show inflation higher than the previous month and move beyond the goal of the 2 % Federal Reserve.

It is expected that economists in Goldman Sachs, led by Jean Hatzius, will increase that the high CPI enlargement rate to 2.8 % on an annual basis, in line with consensus and an increase of 2.7 % reported last month. The basic inflation, which excludes volatile costs such as food and energy costs, is expected to increase to 3.08 %, an increase of 2.9 % last month.

Goldman’s expectations also expected that many of the tariff products will contribute to high inflation, which contributes about 0.12 % to the high monthly consumer price index. Classs with tariffs in July include furniture, auto parts, clothing, entertainment, personal care, communication and education.

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To move forward, economists at Goldman Sachs wrote that “they expect the customs tariff to continue to increase monthly inflation and predict the basic inflation in the consumer price index between 0.3-0.4 %.”

At the end of 2025, they expect the inflation of the basic consumer price index on an annual basis to increase to 3.3 % in December-which economists have noticed 2.5 % when excluding the effects of customs tariffs-while the consumer price index will increase to 2.9 % annually by the end of the year in their prediction.

JP Morgan Economists expected that the consumer price index will increase by 0.3 % on a monthly basis in July, prompting the main CPI inflation number to an annual rate of 2.8 %, as well as consensus. They also estimated that the basic inflation in the consumer price index will increase by 0.34 % for the month of July and to 3.1 % compared to last year, which is slightly higher than unanimity estimates. They wrote in an investor note that Core CPI can come more hot if “the gradual success process has started so far for consumers in acceleration.”

“Perhaps the definitions and commercial advertisements last month have prompted some companies to reassess the possibility that the customs tariff rates would return, which led them to think about passing more costs,” wrote economists at JP Morgan.

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Gregory Daco, chief economist in EY-Parthenon, said in a recent news message that the costs of the higher companies of customs tariffs are beginning to affect inflation this summer, and wrote that “companies logistics and pre-emptive pricing strategies may have bought time, but this pillow erodes.”

“While the effects of inflation from duties are still emerging, they are increasingly visible. In June, the definitions represented nearly a quarter to a third of the consumer price index (CPI),” she wrote.

“Since import prices do not decrease financially, this indicates that foreign exporters transfer costs by absorbing them.” “Meanwhile, American companies report severe effects on their profits, reduce investment plans and employ slower.”

Definitions are taxes on imported goods paid by the importer, which tends to transfer some or all the high costs of consumers through high prices. (Photographer: Sam Wolf / Bloomberg via Getty Images / Getty Images)

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If the consumer price inflation data in July shows that consumer prices continue to go higher with the ease of tariffs full of tariffs, it may complicate the FBI’s expectations for the reduction of interest rates when the Central Bank’s monetary policy committee meets in mid -September.

Federal Reserve Chairman Jerome Powell said that the central bank is in a good position to respond to the signs of the deterioration of economic conditions, although it and the majority of politicians chose to keep fixed rates so far this year as they are waiting to find out whether the definitions lead to one time increase or more continuous amplification pressures.

The President of the Federal Reserve, Jerome Powell, and the majority of the policies of the Federal Open Market Committee, chose to reduce prices last month, with inflation, with higher anti -goal and uncertainty on the impact of inflation in definitions. (Kent Nishimura / Getty Images / Getty Images)

Two conservatives in the Federal Reserve-Michel Bowman, Christopher Waller-from the last decision to maintain fixed prices, on the pretext that the effect of customs tariffs on inflation is likely to be short-term, and the labor market shows signs of slowdown, so both preferred 25 points discounts. This was the first opposition by two federal conservatives to support price cuts since 1993.

Members of the Federal Open Market Committee (FOMC), which takes the federal reserve monetary policy decisions, will receive multiple looks in inflation data before their next meeting on September 16-17.

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Regardless of the CPI report on July, the consumer price index data for August will be published a week before the next FOMC meeting.

In addition, the preferred inflation scale will be issued by the Federal Reserve, which is the Personal Consumption Expenditure Index, by the Ministry of Commerce with July data at the end of this month.