Inflation edges up in July as investors eye BLS integrity

The latest consumer price index (CPI) data from the Bureau of Labor Statistics (BLS) shows inflation in the US continued its modest upward trend in July, even as President Donald Trump, policymakers, and investors scrutinize the reliability of official economic data amid recent leadership changes at the BLS. July results largely reflected economists' forecasted expectations.

According to the BLS, the Consumer Price Index for All Urban Consumers (CPI-U) rose 0.2% on a seasonally adjusted basis in July, following a 0.3% increase in June. Excluding food and energy, the core CPI rose 0.3% in July and 3.1% over the past year.

Over the past 12 months, the all-items index climbed 2.7%, with shelter costs serving as the primary driver of the monthly increase, the Tuesday data release said. The food index was unchanged, while energy prices fell by 1.1% – notably, gasoline prices dropped by 2.2% during the month.

The report arrives at a time of heightened attention on the BLS. Earlier this month, President Trump dismissed BLS Commissioner Erika McEntarfer, citing concerns about data integrity after a weak jobs report and subsequent revisions to previous months’ employment figures.

The move has fueled debate about the independence of the agency and the reliability of its data, especially as the $2.1 trillion Treasury Inflation-Protected Securities (TIPS) market relies on CPI figures to set payouts.

“This isn't just an academic discussion about getting the right numbers – these numbers matter for TIPS,” Michael Feroli, chief US economist at JPMorgan Chase, told Reuters. “There's real money on the line here.”

The White House has argued that “historically abnormal revisions in BLS data over the past few years since COVID have called into question the BLS’s accuracy, reliability, and confidence,” adding that the administration intends to restore trust in the agency. For now, Deputy Commissioner William Wiatrowski is serving as acting commissioner.

The inflation report is the first major data release from the BLS since the firing, and comes as the US economy faces a complicated outlook. Recent tariffs have contributed to price increases for imported goods such as clothing, furniture, and toys, according to analysts. Economists had expected prices to rise 2.8% year-over-year in July, a slight uptick from June but still below the 3% rate recorded in January, when Trump took office .

The broader economic context remains uncertain. The latest jobs report showed hiring at its slowest pace since 2020, and GDP growth for the first half of 2025 averaged just 1.2% annualized, down from 2.8% in the same period last year.

This combination of sluggish growth and persistent inflation has raised concerns about the possibility of stagflation – a scenario where the economy slows while prices continue to rise.

For advisors, the implications are significant. The Federal Reserve faces a delicate balancing act in its duel mandate: raising interest rates can counter inflation risks may stifle borrowing and further slow the economy, while lowering rates to stimulate growth could fuel additional price increases. The Fed’s next rate-setting meeting is scheduled for September, and market expectations for a rate cut have risen in light of recent data.

Meanwhile, gold prices have steadied after a sharp sell-off, with investors closely watching the inflation numbers for clues about the Fed’s next move. “After recent surprise weak labor data, if inflation numbers come in softer, market expectations for a rate cut are likely to rise, which would support gold,” said ANZ commodity strategist Soni Kumari.

The BLS is scheduled to release the next CPI report on September 11.