WTF! Inflation didn't go up in July?

Ok, we all agree that Voldemort is a nasty wizard. His legacy, however, will likely be determined by how his trade negotiations go and whether he can reorder the global economic order given America's newly acquired leverage.

The media and economists have missed the boat entirely. He's not starting a war; he's negotiating. It's his hand to lose...if he overplays it. His narcissism is too great to allow him to fail during the midterms. I suspect he'll stick the landing in the next 5-6 months.

I'll continue to loathe him but benefit from his Machiavellian handling of our trade partners. He may be an asshole, but he's our asshole.

Meanwhile, inflation stays low, confounding the experts.

Inflation Held Steady at 2.7% in July

Prices excluding food and energy categories rose 3.1% over the past 12 months, above forecasts

By Rachel Wolfe, WSJ

Updated Aug. 12, 2025

July’s consumer price increase of 2.7% year-over-year matched June’s rate, slightly below economists’ forecasts.

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Year-over-year inflation held steady in July, but a key measure of underlying price growth picked up.

Consumer prices were up 2.7% in July from a year earlier, the Labor Department said Tuesday, unchanged from June’s gain.

That was below the 2.8% rise expected by economists surveyed by The Wall Street Journal.

Prices excluding food and energy categories—the so-called core measure economists watch in an effort to better capture inflation’s underlying trend—rose 3.1% over the past 12 months, above forecasts for a 3% increase.

Stock futures jumped after the report was released. Stocks remained in the green throughout the day, with the Dow Jones Industrial Average up 1%.

Tuesday’s report keeps an interest-rate cut in September firmly on the table. The lack of an abrupt acceleration in price pressures likely removes an obstacle to lowering rates, amid growing worries about a slowing labor market.

Economists braced for the worst when President Trump announced his tariff plan in April, yet the U.S. economy remained resilient. Here’s how that strength could be tested. Photo Illustration: Annie Zhao

Federal Reserve officials were concerned earlier this year that large tariff increases could push up prices, stoking concerns about inflation. Those worries haven’t been put to rest, but cost pressures have diffused more broadly through supply chains so far.

Prices either fell or stabilized in the categories that consumers tend to pay the most attention to: shelter, energy and groceries. That helped keep overall inflation in check.

Energy prices declined 1.1% compared with June, with gasoline down 2.2%. Oil prices have slipped this year, driven down by expectations of a slowing global economy.

Groceries fell 0.1%. Rent returned to a more normal 0.3% increase after a period of big jumps, said Bank of America senior U.S. economist Stephen Juneau.

“Consumers might be taking some relief in the fact that some of their most common and most necessary purchases are seeing easing price pressures,” Juneau said.

A few categories exposed to tariffs went up compared with June. Furniture prices rose 0.9%, tires rose 1% and pet products rose 0.5%.

“That’s definitely a sign of tariffs passing through,” said Alan Detmeister, economist at UBS investment bank.

President Trump criticized Fed Chair Jerome Powell on social media, calling him “Too Late” and demanding lower interest rates. Trump said the economy is performing so well that it has “blown through Powell and the complacent Board.” He also renewed previous complaints about cost overruns in the central bank’s building renovations and said he was entertaining unspecified legal action against Powell related to the issue.

Still, especially with the current tariff landscape more muted than Trump promised on Liberation Day, goods prices haven’t increased as much as economists initially feared. Many businesses pre-emptively built up their inventories before tariffs took effect.

“Companies are trying to be mindful of how much they push pricing after coming off of pandemic price shocks,” said Michelle Meyer, chief economist at Mastercard.

That could mean tariffs will turn out to be a slower drip than economists expected, “or that businesses are eating some of the costs,” Juneau said.

Apparel, for example, rose only 0.1% on the month, and new-vehicle prices remained flat.

“What we hear from the auto companies is that dealers still have inventory,” said Michael Gapen, chief U.S. economist at Morgan Stanley. “So they may be reluctant to pass through increases until they work through that.”

The bad news is that inflation in the service sectors accelerated faster than expected in July, Gapen said.

Earlier in the summer, services like airline fares and hotels were falling sharply, driving down overall inflation. That has reversed, with airfare up 4% month-over-month, medical care services up 0.8% and motor vehicle maintenance up 1%.

“It’s concerning because services prices tend to be sticky,” said Gapen. In other words: They rarely fall.

Woman shopping for produce in a Whole Foods Market.

Grocery prices fell 0.1% in July compared with June. Photo: Richard B. Levine/Zuma Press

Still, consumers are feeling a bit more upbeat than they had been earlier this year. Expectations of inflation in the coming year fell for the second-straight month in July, according to the University of Michigan’s survey of consumer sentiment, though they remain above where they were just after the election.

Meyer, the Mastercard economist, attributes the slight improvement in people’s moods to the fact that inflation so far has been concentrated in items like appliances and car tires that consumers don’t interact with as regularly. Prices for new and used cars, and airline fares, actually decreased in June.

“Even though furniture is going up,” she said. “It’s not something you need to buy.”