Inflation Held Steady at 2.7% in July

Core inflation jumped up in July, but annual headline inflation held steady, matching the pace of the previous month.

The consumer price index (CPI) for July increased 0.2% on a monthly basis and rose 2.7% for the 12 months ending in July, the U.S. Bureau of Labor Statistics (BLS) reported Aug. 12. That’s the same as June’s 2.7% figure and slightly below economists’ 2.8% estimate.

The index for shelter rose 0.2% in July and was the primary factor in the all items monthly increase, the BLS reported. The food index was unchanged over the month as the food away from home index rose 0.3% while the food at home index fell 0.1%. Meanwhile, the index for energy fell 1.1% in July as the index for gasoline decreased 2.2% over the month.

Core inflation, which excludes volatile food and energy prices, rose 0.3% in July and 3.1% annually, up from 2.9% in June.

The figures indicate that inflation is still problematic, although the upward trend is slower than in the past few years when inflation was red-hot.

Economists have been predicting that President Donald Trump’s sweeping tariffs on imported goods would contribute to higher costs.

“Although we are still in the early stages of tariffs biting, [and] prices for consumer products, such as household appliances, electronics, and key inputs for production (such as steel) are on the rise, there is still a high degree of uncertainty surrounding how long it will take for tariffs to fully trickle down through to producer and consumer prices,” said Sydney Ross, economic researcher at SHRM.

Since it has taken longer for tariff-related price increases to filter down to consumer prices, “whether employees start to feel more financial pressure in the coming months will largely depend on whether firms plan on absorbing tariff-related price increases or pass along price hikes to consumers,” she said.

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Real Earnings Rise

Meanwhile, real earnings have increased slightly for July, with real average hourly earnings for all employees rising 0.1% from June to July, the BLS reported separately. This result stems from an increase of 0.3% in average hourly earnings combined with an increase of 0.2% in the CPI.

Real average weekly earnings increased 0.4% over the month due to the change in real average hourly earnings combined with an increase of 0.3% in the average workweek, the BLS said. 

From July 2024 to July 2025, real average hourly earnings increased 1.2%, seasonally adjusted.

Given the continually changing economic environment, Ross advised company and HR leaders to pay attention to evolving patterns and policies.

“Given concerns that new trade policies will put upward pressure on prices in the foreseeable future, employers directly impacted by changes to trade policies would be wise to continue monitoring the situation as it evolves,” she said.