US Inflation Cools in July, But Core Prices Still Rising

US Inflation Cools in July, But Core Prices Still Rising

*Washington — August 14, 2025*

US consumer inflation slowed slightly in July, but the cost of essential services continued to climb, keeping underlying price pressures high.

The Consumer Price Index (CPI) rose 0.2% last month, down from a 0.3% gain in June. A sharp 2.2% drop in gasoline prices and steady food costs helped ease the headline number. However, when excluding food and energy, core inflation jumped 0.3% — the biggest monthly increase since January.

The rise was fueled by higher airline fares, more expensive healthcare, and record increases in dental service prices. On an annual basis, overall CPI was up 2.7%, while core CPI rose 3.1%.

Economists say the latest figures could complicate the Federal Reserve’s decision on whether to cut interest rates in September. With core inflation still well above the Fed’s 2% target, policymakers face a tricky balancing act between cooling the economy and avoiding a slowdown in the labor market.

The report also reignited concerns about the reliability of US inflation data. The Bureau of Labor Statistics has cut back on data collection in some regions due to budget and staffing shortages, relying more on estimates — a move that some experts warn could lead to more volatility in the numbers.

Following the release, Wall Street stocks climbed, the dollar weakened, and long-term Treasury yields rose.

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