August 12, 2025
In the short term, markets will likely embrace these numbers because they should allow the Fed to focus on labor-market weakness and keep a September rate cut on the table. Longer term, we likely haven’t seen the end of rising prices as tariffs continue to work their way through the economy.
Chief Economic Strategist at Morgan Stanley Wealth Management, Ellen Zentner, discussing the July Consumer Price Index report. The latest reading came in slightly below expectations, leading many economists to forecast a cut in interest rates next month.
Why It Matters: The Consumer Price Index (CPI) tracks how much a mix of goods and services cost in the U.S. – serving as a key measure of inflation. When inflation rises, your dollar buys less. In July, prices were up 0.2% from June and 2.7% from a year earlier. The biggest jumps? Medical care, air travel, recreation, home goods and used vehicles – things most Americans regularly spend on.
Something to Consider: Core inflation – considered a better gauge because it excludes volatile food and energy prices – grew at its highest pace since January: “The July data, which was released by the Bureau of Labor Statistics, provides a clear sign that businesses are more readily passing along tariff-related costs to their customers after a prolonged period in which price gains were muted. Still, the price gains came in more or less as expected, suggesting the central bank can move ahead with plans to soon restart interest rate cuts that it put on hold in December.” (New York Times)
Read the full CPI report HERE.
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by Stephanie Wagner, based in Florida
