July's U.S. inflation remains static, yet there's a modest rise in core prices
In July 2025, the consumer price index (CPI) rose 0.2%, following a 0.3% increase in June, according to the Labor Department's Bureau of Labor Statistics (BLS). The report was published amid concerns over the quality of inflation and employment reports due to budget cuts and staffing reductions.
The BLS suspended data collection in several U.S. cities, including one city each in Nebraska, Utah, and New York, as well as on average 15% of the sample in the other 72 areas. This reduction in data collection points has led to a greater volatility in the monthly CPI figures, but it is not believed to affect the overall accuracy of CPI estimates.
Excluding volatile food and energy components, the CPI rose 0.3% in July, marking the biggest increase since January. The core CPI, which excludes food and energy, increased 3.1% year-over-year in July, up from 2.9% in June.
The number of collected prices and rents used to calculate the CPI was temporarily reduced due to the suspensions. The BLS has been using imputations to fill in the missing information, with the share of different cell imputations in the CPI data jumping to 35% in June from 30% in May.
The Federal Reserve (Fed) tracks different inflation measures for its 2% target. Despite the volatility in the CPI data, the Fed left its benchmark overnight interest rate unchanged in July for the fifth consecutive time since December.
The underfunding of the BLS under both Republican and Democratic administrations contributed to the suspension of data collection. The situation was exacerbated by the Trump White House's unprecedented campaign to reshape the government through deep spending cuts and mass layoffs of public workers.
Economists had forecasted a 0.2% increase in the CPI and a 2.8% year-over-year rise, but the actual figures were slightly lower. While these measures adopted by the BLS will not introduce bias in the CPI data, the volatility was a cause for concern.
The concerns were amplified following the dismissal of Erika McEntarfer, the head of the BLS, by President Donald Trump. McEntarfer's dismissal came amidst stall-speed job growth in July and sharp downward revisions to the May and June nonfarm payrolls counts.
In summary, the budget-driven suspension of data collection in certain cities has made the reported CPI data somewhat more volatile month-to-month but has not compromised its reliability or introduced bias in inflation trends reported by the BLS under the Trump administration.
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