Inflation Pressures Mount as CPI and PPI Highlight Tariff Shock and Service-Sector Strain The US economy was hit with two key inflationary signals last week following the release of Consumer Price CPI and Producer Price PPI data for July. Both confirmed a picture of sticky inflation, with rising service costs and tariff-driven price pressures, which suggest that profit margins may narrow and that consumer prices could remain elevated in the months ahead. The July CPI showed that consumer prices rose 0.2 percent from June and 2.7 percent from a year earlier. This relatively moderate number was due to a 2.2 percent monthly decline in gasoline prices, which helped offset increases elsewhere. However, the bigger concern was the core CPI, which strips out volatile food and energy costs. That measure climbed 0.3 percent in July, its largest monthly gain in six months, and was up 3.1 percent from last year.
Figure 4. Consumer Price Index Chart Source: Macromicro)