July CPI: Cooling Off… But Not Exactly a Chill Breeze
- Rebellionaire Staff
- Aug 12
- 2 min read
Headline number first—because that’s what the headlines are screaming about anyway. Inflation’s latest reading? Headline CPI clocked in at +0.2% month-over-month and +2.7% year-over-year [1]. That’s the lowest annual rate we’ve seen since early 2021 [2]. Markets were expecting 2.8%, so technically, that’s a “beat.” Cue the “inflation is dead” victory laps.
But then you peek under the hood. Core CPI—that’s the version that strips out food and energy—jumped +0.3% MoM and +3.1% YoY [1]. And that’s up from June’s 2.9% [2]. So, yeah, not exactly a straight line toward 2%. More like, “We’re getting closer, but the passenger in the backseat just spilled coffee on the roadmap.”
What’s Cheaper, What’s Pricier
Let’s play the “who’s helping, who’s hurting” game.
Helping:
Gasoline – Down 2.2% MoM and a full 9.5% from last year [1].
Energy overall – Dropped 1.1% MoM [1], easing the utility bill pain.
Food at home – Slightly down (-0.1% MoM) [1].
Hurting:
Shelter – Up 0.2% MoM, still eating nearly 90% of the total CPI gain [1].
Medical care – Up 0.7% MoM [1].
Airfares – Spiking 4% MoM [1].
Tariff-hit goods – Electronics, autos, and apparel prices creeping up thanks to new trade policies [5].
The Fed’s Dilemma (and the Market’s Mood)
With headline inflation cooling, Wall Street’s already pricing in a September rate cut [3]—somewhere between a coin flip and near certainty, depending on who you ask. But core inflation ticking back up? That’s the part that makes Powell’s eye twitch [7].
Markets loved it anyway. Stocks popped, bonds rallied, and the 10-year yield dipped to 4.27% [4]. Bitcoin had a little mood swing—down, then back up—because crypto traders are basically caffeinated squirrels chasing yield [6].
The Tariff Time Bomb
Trump’s new tariffs are already starting to filter into prices [5]—think an extra 0.5–1% tacked onto CPI by year-end [2]. Some say it’s temporary. Others warn it could undo months of disinflation progress.
So… Where Does That Leave Us?
If you’re the Fed, you’re cautiously optimistic but not popping champagne yet. If you’re an investor, you’re wondering if this is a “go big” moment or a head fake. And if you’re a regular consumer? You’re still side-eyeing the grocery bill and wondering when rent will finally chill out.
Biggest questions from here: Will tariffs derail the progress? Or are we just in the messy middle before inflation finally gives up?
Sources:
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