Rate-Cut Odds Soar As US Consumer Prices Once Again Reject Trump Tariff Terror

With a new boss looming at The BLS, one wonders what the ‘old boss’ has in hand for today’s CPI data (with consensus seeing both headline and core YoY price changes ticking higher) after June’s consumer prices came in cooler than expected, disappointing the Trump Tariff Tantrum crowd. Will this time be different… Will the dreaded tariff-flation show up this time?

Headline CPI rose 0.2% MoM in July (as expected) and +2.7% YoY (cooler than the 2.8% expected) and in line with the June print…

Source: Bloomberg

Headline CPI rose 0.2%, after rising 0.3% in June. CPI Core rose 0.3% in July, following a 0.2% increase in June.

• Indexes that increased over the month include medical care, airline fares, recreation, household furnishings and operations, and used cars and trucks.

• The indexes for lodging away from home and communication were among the few major indexes that decreased in July.

Core CPI rose 0.3% MoM (as expected) but YoY rose 3.1% (hotter than the 3.0% expected) – the highest since February…

Source: Bloomberg

Under the hood, Fuel Oil and Transportation costs rose the most but Gasoline and Food at Home costs fell MoM…

Core CPI MoM Details:

• The shelter index increased 0.2 percent over the month.

  • The index for owners’ equivalent rent rose 0.3 percent in July as did the index for rent.

  • Conversely, the lodging away from home index fell 1.0 percent in July.

• The medical care index increased 0.7 percent over the month, following a 0.5-percent increase in June.

  • The index for dental services increased 2.6 percent in July and the index for hospital and related services increased 0.4 percent.

  • The physicians’ services index rose 0.2 percent over the month, while the prescription drugs index fell 0.2 percent.

• The index for airline fares increased 4.0 percent over the month, after declining 0.1 percent in June.

• The recreation index increased 0.4 percent over the month, as did the household furnishings and operations index.

• The index for used cars and trucks rose 0.5 percent in July and the index for personal care rose 0.4 percent.

• The new vehicles index was unchanged over the month while the communication index fell 0.3 percent.

Annual changes:

• The shelter index increased 3.7 percent over the last year. Other indexes with notable increases over the last year include medical care (+3.5 percent), household furnishings and operations (+3.4 percent), motor vehicle insurance (+5.3 percent), and recreation (+2.4 percent).

Goods inflation is accelerating (some will argue ‘tariffs’, some will argue fuel) while Services inflation has stabilized…

Source: Bloomberg

There is one problem in the data… SuperCore CPI (Services ex-Shelter) rose 0.55% MoM (hottest since January) and up 3.59% YoY (hottest since February)…

Source: Bloomberg

The jump in Transportation costs and Medical Care Services stood out for SuperCore (neither seem like they are affected in any way by tariffs)…

3m and 6m annualized CPI is also refusing to bow to the terror predicted by Trump tariff haters…

So, not exactly the screaming spike in prices that Democrats interviewed by UMich have hallucinated about?

Tiffany Wilding, Pimco economist, tells Bloomberg TV that tariff-related pressures are contained within certain areas of the report:

“It’s very concentrated within goods, it’s happening slowly, and outside of that, inflationary pressures look very manageable. So I think for a Federal Reserve, that is a very good sign.” 

Art Hogan, B. Riley Wealth chief market strategist, weighs in:

“Core goods are the real driver of the move up in the index, while being somewhat offset by energy and shelter cost. The report will likely not change the path forward for the Fed, as we expect to see rate cuts at the next three meetings.” 

Rate-cut expectations rose after the CPI print with September now trading at 95%…

But there is a silver lining…

The new BLS commissioner will not be fired today

— zerohedge (@zerohedge) August 12, 2025

And cue the “just wait until next month” arguments!!…

Liesman: “I don’t want to rain on the market’s parade here”

Kernen: “You do”

— zerohedge (@zerohedge) August 12, 2025