July 2025 Inflation Report: What’s Happening With Prices and Tariffs?

According to the Bureau of Labor Statistics, prices for things people buy in the United States went up by 2.7% in July 2025 compared to July last year.

This increase was about the same as what we saw in June. Month-to-month, prices increased by 0.2%.

Some basics, like groceries and gasoline, actually got a bit cheaper. However, experts warn that changes in trade policy and labor rules might make things more expensive in the coming months.

Economists say tariffs—taxes on goods imported from other countries—and changing immigration rules are starting to have more impact.

Mark Zandi, a chief economist, explained that while the effects aren’t huge yet, they could become more noticeable soon.

If you look at “core inflation,” which leaves out changing food and gas prices, it rose by 3.1% compared to last year. This is the highest increase in core inflation since February 2023. Prices for goods like clothes, furniture, and appliances also went up, in part because of the new tariffs.

Tariffs are meant to be paid by companies importing goods, but often, these costs are passed on to shoppers. The Budget Lab at Yale University estimates that, because of recent tariffs, the average U.S. household could pay about $2,400 more, especially for products like clothes, furniture, and appliances.

Some businesses still have items in stock that they bought before tariffs started, which means it will take a little time for the full price increases to reach buyers.

There are also new limits on immigration, influencing how much companies have to pay workers, especially in jobs that often hire immigrants, like personal care services.

This includes things like haircuts, dry cleaning, and pet grooming. With fewer workers available, companies need to pay higher wages, and that leads to higher prices for these services.

Looking closer at the numbers, in July, the price for groceries and gasoline fell slightly (by 0.1% and 0.5%, respectively). However, some things got more expensive—coffee prices jumped 2.8%, ground beef went up 2.4%, and eating out also cost more.

The situation is further complicated by new tariffs against imports from over 60 countries and the European Union, which have pushed some prices up as well.

Still, experts say that the recent effects of tariffs on consumer prices are not alarming yet. With inflation still a bit above the Federal Reserve’s 2% goal, financial markets are paying close attention to what policies will be decided at the central bank’s next meeting in September.

According to analysts, July’s inflation numbers are unlikely to stop the Federal Reserve from cutting interest rates soon.

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