Does the latest United States consumer price index (CPI) report show that Americans are paying more or less for goods? You might be seeing mixed messaging based on the politicians you listen to or what your social media algorithms surface.<\/p>\n
Some say the numbers show President Donald Trump\u2019s success. Others say the opposite.<\/p>\n
Every month, the federal Bureau of Labour Statistics publishes the consumer price index, which measures price changes for goods and services, including food, apparel, gasoline and housing. The report is used to assess economic stability and inform policy decisions.<\/p>\n
Republican Senator Rick Scott of Florida celebrated the July report on the day of its release.<\/p>\n
\u201cAnother month of inflation coming in lighter than expected. That\u2019s GREAT NEWS for Florida families, and another reminder to trust in Pres. Trump!\u201d Scott posted on August 12 on X, alongside a short Fox Business clip about energy and gas price decreases.<\/p>\n
US Representative Kathy Castor, a Democrat from Florida, had a different take.<\/p>\n
\u201cTrump is raising your grocery bill to line the wallets of his billionaire friends. Nothing great about this for American families across the country,\u201d Castor wrote in an August 12 X post that included a link to a CBS News story that said in its headline that the index rose in July by 2.7 percent on an annual basis.<\/p>\n
Economists told PolitiFact this muddled framing isn\u2019t new, and people from different political tribes use varying metrics to reinforce their views. They said the full picture on the economy\u2019s health and trajectory needs more time to come into focus.<\/p>\n
Overall, the report\u2019s numbers are \u201canother dose of modest bad news,\u201d said Douglas Holtz-Eakin, president of the centre-right policy institute American Action Forum. \u201cIt\u2019s not dramatic yet, it\u2019s not a crisis, but it\u2019s not positive.\u201d<\/p>\n
Trump\u2019s tariffs, widely watched to see how they affect consumer prices and inflation, are still new and some\u00a0just went into effect<\/a>\u00a0in August.<\/p>\n \u201cSince at least 2021, the CPI reports have become a partisan battleground with both sides cherry picking the data to best support their argument,\u201d said Jason Furman, an economist and professor at Harvard University\u2019s John F Kennedy School of Government who previously served as an economic adviser to former President Barack Obama. \u201cAnd there is so much data in the CPI report that there is always some way to slice and dice it to support just about any view.\u201d<\/p>\n The CPI report and its meaning<\/strong><\/p>\n For July, CPI<\/a> increased 0.2 percent compared with the previous month and 2.7 percent from a year ago. That\u2019s slightly cooler than the 2.8 percent rise economists had forecast, thanks to declines in gasoline and energy prices.<\/p>\n Gary Burtless, senior fellow at the Brookings Institution, said the 2.7 percent 12-month rise in consumer prices for all items is a \u201cbit lower than it was at the start of 2025,\u201d to Trump\u2019s advantage. But the number is also a bit higher than it was from March to July, he said, an advantage for Trump\u2019s critics.<\/p>\n A separate measure, core inflation \u2013 which excludes food and energy because they are considered volatile measures prone to large, rapid fluctuations \u2013 increased 0.3 percent for July and 3.1 percent from a year ago. This is the first time annual core inflation, which officials use to monitor underlying, longer-term inflation trends, has risen above 3 percent in several months. This outpaces Federal Reserve projections before the 2024 election, which projected 2.2 percent median core inflation for 2025.<\/p>\n \u201cEconomists tend to focus on the core because it is less erratic than food and energy prices,\u201d said Dean Baker, cofounder of the liberal Center for Economic and Policy Research. \u201cFood and energy prices are very important, but big changes in either direction tend to be reversed. Therefore, it is often more useful if we are looking for future trends to look at the core index.\u201d<\/p>\n Despite the uptick, the report was mild enough for investors, as US stocks closed near a record high on August 12. The stock market appears, for now, to be focusing on the likelihood that the Federal Reserve will cut interest rates in September, given concerns about a cooling labour market. Central bank officials, to Trump\u2019s disapproval, have held rates steady in 2025 as they wait to see tariffs\u2019 effects on the economy.<\/p>\n The July data comes amid a Bureau of Labor Statistics shake-up. After the agency\u2019s downward revision of May and June employment data, Trump fired<\/a>\u00a0bureau Commissioner Erika McEntarfer<\/a>, accusing her of political bias. Trump nominated E J Antoni<\/a>, an economist at the conservative Heritage Foundation who has\u00a0criticised\u00a0the bureau, as the agency\u2019s new commissioner<\/a>.<\/p>\n The long and winding road of Trump\u2019s tariffs<\/strong><\/p>\n As the Trump administration highlights the collection of nearly $130bn from the new tariffs<\/a> so far, many economists expect that businesses will begin passing on the additional costs to US customers.<\/p>\n Goldman Sachs estimated in an analysis shared with Bloomberg that US companies have so far absorbed the bulk of tariff costs \u2013 about two-thirds of the levies \u2013 while consumers absorbed about 22 percent of the costs through June.<\/p>\n But Goldman Sachs said it expects the consumer share of the costs to soar to 67 percent by October if the tariffs follow previous patterns of how import levies affected prices.<\/p>\n Trump wrote in an\u00a0August 12 Truth Social post\u00a0that Goldman Sachs CEO David Solomon should replace its economist. \u201cIt has been proven, that even at this late stage, Tariffs have not caused Inflation, or any other problems for America, other than massive amounts of CASH pouring into our Treasury\u2019s coffers,\u201d Trump wrote.<\/p>\n Some US companies have avoided passing along higher prices by stockpiling goods\u00a0ahead of the tariffs\u2019 implementation. Others have absorbed costs to avoid losing customers or are holding off in hopes that\u00a0courts<\/a>\u00a0nix the tariffs.<\/p>\n \u201cThat\u2019s just businesses making business decisions,\u201d said Holtz-Eakin, from the American Action Forum. \u201cBut there will be a point if the tariffs stay in place at the current levels, where that just won\u2019t be feasible any more.\u201d<\/p>\n Many studies of past tariffs have found that they\u00a0harm the economy\u00a0and raise consumer prices.<\/p>\n