CPI rose in July by 2.7% on an annual basis. Here's what that means.
CBS1 day
US Inflation Holds Steady, Core Prices Increase
Above: The U.S. Department of Labor headquarters in Washington, D.C., on Monday, Aug. 11, 2025. Image copyright: Al Drago/Bloomberg/Getty Images
The Spin
Republican narrative
The inflation data proves tariffs aren't driving up consumer prices as critics predicted. Energy costs dropped significantly, food prices stayed flat, and overall inflation came in below expectations. Small business optimism hit a five-month high while tariff revenue pours billions into Treasury coffers. The economy is booming despite Fed Chair Powell's refusal to cut rates.
Democratic narrative
Core inflation jumped to its highest level in months, signaling tariff costs are starting to hit consumers through higher prices for furniture, appliances and services. Goldman Sachs estimates businesses will pass more tariff costs to consumers in coming months, potentially pushing inflation toward 3.8% by year-end. The Fed faces a difficult choice between supporting employment and controlling rising prices.