Tariff-induced inflation will be the primary narrative from the consumer price index when the report for July is released on Tuesday.
Although falling gasoline prices will put an effective cap on top-line inflation, a closer look at the data will reveal rising goods inflation caused by rising trade taxes, and sticky service inflation.
I expect a monthly increase of 0.3% in the top-line figure and the core, and annual increases of 2.8% for top line and 3% for the core.
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Given the level of detail inside the CPI—think rising meat and apparel prices—any potential pushback on the quality of the data will be just as interesting as what followed the most recent July U.S. jobs report.
The primary focus in the CPI data will be on the goods sector, which is experiencing price increases directly linked to tariffs.
Autos, appliances and apparel will all see sustained price increases. Toys, food, furniture and other electronics will also see an increase in prices linked to tariffs.
