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Economic News

United States: Core Inflation Picks Up Slightly

August 12, 2025
Francis Généreux
Principal Economist

Highlights

  • The Consumer Price Index (CPI) rose by 0.2% in July, following a 0.3% increase in June. Excluding food and energy, core CPI climbed 0.3% in July, up from a 0.2% gain in June.
  • The annual change in total CPI held steady at 2.7%. Core inflation accelerated from 2.9% to 3.1%.

Comments

Overall, total inflation remained stable in July, following a June uptick largely driven by higher energy prices. Those prices declined last month, particularly for gasoline. Combined with stagnant food prices, this helped slow monthly CPI growth in July and stabilize its annual rate.

 

The picture is quite different for core CPI, which excludes food and energy. Goods prices posted a second consecutive monthly increase of 0.2%. While not extraordinary, this contrasts with the previous months’ price stability (monthly average of 0.0% from June 2024 to May 2025).

 

That said, it remains difficult to clearly assess the net effects of the Trump administration’s trade policy. Some upward pressures are evident, but other prices have declined due to the delayed impact of tariff reductions on imports from China. Notably, used car prices rose for the first time since February, despite being less affected by tariffs.

 

As for services excluding energy, the 0.4% increase in July was the highest since January. Shelter-related price increases remained stable, but upward pressure intensified in transportation and medical services. Airfare surged (+4.0% m/m), while hotel rates declined again. Overall, three-month and year-over-year price changes for services excluding energy and shelter all accelerated in July.

 

US inflation continues to show mixed signals. While some upward price pressures persist, fears of a sharp inflation spike driven by tariff hikes have yet to materialize. The effects may be more delayed than expected, or the US economy may once again be demonstrating its strong adaptability. The impact of newly announced tariff measures warrants close monitoring, as do mounting pressures in the services sector.

Implications

The acceleration in core inflation is not yet alarming, but it does represent a step in the wrong direction. This will further complicate the Federal Reserve’s task, as it must also consider the slowing labour market while facing pressure from President Trump.

NOTE TO READERS: The letters k, M and B are used in texts, graphs and tables to refer to thousands, millions and billions respectively. IMPORTANT: This document is based on public information and may under no circumstances be used or construed as a commitment by Desjardins Group. While the information provided has been determined on the basis of data obtained from sources that are deemed to be reliable, Desjardins Group in no way warrants that the information is accurate or complete. The document is provided solely for information purposes and does not constitute an offer or solicitation for purchase or sale. Desjardins Group takes no responsibility for the consequences of any decision whatsoever made on the basis of the data contained herein and does not hereby undertake to provide any advice, notably in the area of investment services. Data on prices and margins is provided for information purposes and may be modified at any time based on such factors as market conditions. The past performances and projections expressed herein are no guarantee of future performance. Unless otherwise indicated, the opinions and forecasts contained herein are those of the document’s authors and do not represent the opinions of any other person or the official position of Desjardins Group.