US inflation steady at 2.7% in July despite tariff pressures
US inflation remained unchanged at 2.7% in July, defying economists’ forecasts of a rise fueled by tariffs imposed by President Donald Trump on key trading partners.
Tuesday’s annual consumer price index figure was in line with June’s reading and below expectations of 2.8 per cent among analysts surveyed by Bloomberg, News.Az reports, citing foreign media.
The figure was dragged lower by weaker fuel prices, with the index for gasoline down 9.5 per cent over the past 12 months.
Core inflation, which strips out volatile food and energy prices, rose to 3.1 per cent, surpassing expectations of a smaller rise to 3 per cent from June’s 2.9 per cent.
The US dollar and Treasury yields slipped as investors bet on a faster pace of rate cuts by the Federal Reserve following the data release.
The two-year Treasury yield, which reflects interest rate expectations, fell 0.08 percentage points to 3.72 per cent.
Trump has sought to use tariffs to reshape the US’s trading relationship with the world, prompting warnings of a jump in domestic prices. Inflation ticked up in June in what economists cautioned were the first signs of the trade war seeping through to consumers.
The data from the Bureau of Labor Statistics comes after Trump sacked the head of the agency earlier this month, following a July jobs report that showed a sharp slowdown in hiring over the summer.
On Monday, the president announced he had chosen EJ Antoni, a loyalist from the rightwing Heritage Foundation, to lead the BLS. The US Senate will need to confirm him.
The latest inflation reading also comes in the midst of a campaign by the president to pressure US Federal Reserve chair Jay Powell into reducing interest rates, currently at 4.25 per cent to 4.5 per cent, by as much as 3 percentage points.
Most members of the Fed’s rate-setting committee have indicated a preference to hold off on any reduction in borrowing costs until the inflationary impact of tariffs becomes clear, but some have argued the impact of the levies on prices will be limited.
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