Inflation isn’t cooling as fast as we’d like. The Consumer Price Index (CPI) for July 2025 rose 2.7% year-over-year, a nudge below the 2.8% economists expected, but still above the Federal Reserve’s 2% target.
According to CBS News, the latest CPI data shows a 2.7% annual increase, with core inflation hitting a five-month high of 3.1%, signaling persistent price pressures despite a slight monthly uptick of 0.2% from June to July 2025.
For the uninitiated, the CPI measures price changes in everyday goods and services—think food, gas, and clothing. It’s a key gauge of inflation, and when it’s above the Fed’s 2% goal, as it has been all year, it means your dollar buys less.
Month-to-month, CPI crept up 0.2% from June to July 2025, matching economist forecasts. Year-over-year, that 2.7% rise mirrors June’s reading, showing inflation isn’t budging much.
Core inflation, which strips out volatile food and energy costs, jumped 3.1% annually, higher than the expected 3%. That’s a red flag for anyone hoping for quick relief at the checkout line. Food prices are a mixed bag. Overall, they rose 0.2% monthly and 2.9% yearly, with groceries up 0.1% month-over-month and 2.2% since last July.
Some staples are hitting wallets hard. Coffee surged 2.6% from June to July and a whopping 14.8% year-over-year, while ground beef climbed 2.4% monthly and 11.5% annually.
Eggs offered a small reprieve, dropping 3.4% month-over-month, though they’re still 16.4% pricier than last July. Dining out isn’t cheap either—restaurant prices rose 0.3% monthly and 3.9% yearly.
Americans feel the pinch, with a poll showing 50% citing grocery costs as a major stress. Fast-food chains like Wendy’s are seeing fewer customers, cutting sales forecasts amid competition and economic uncertainty.
Gasoline offered some relief, falling 0.5% from June to July and 9.5% year-over-year. But new tariffs, effective August 7, 2025, on goods from over 60 countries and the EU, are starting to nudge prices up for imports like shoes and furniture.
Economists note tariff effects were muted earlier in 2025, but June data hinted at rising costs for apparel and appliances. “There is some sign of tariff pass through,” said Seema Shah, chief global strategist at Principal Asset Management.
Shah added, “It’s not significant enough to ring alarm bells.” Still, UBS economist Alan Detmeister warned these price hikes might linger, saying, “We think they’re going to be much more lasting.”
With CPI at 2.7%, the Fed’s 2% target remains elusive, yet analysts see an 88% chance of a rate cut at the September 16-17, 2025, meeting. A slowing jobs report for July strengthens that case.
The Fed’s dual mandate—maximizing employment while taming inflation—means a balancing act. Upcoming CPI and jobs data will be critical, but as Shah noted, “Today’s CPI print is not hot enough to derail the Fed.”
For investors and savers, this is a moment to watch. Inflation erodes purchasing power, so consider inflation-protected assets or high-yield savings while rates might still drop. Stay frugal—every dollar saved now fights tomorrow’s higher prices.