US inflation grows at highest rate in 6 months as Trump's tariffs kick in

The inflation in the United States rose at the highest rate in six months in July, with core inflation growing 3.1 per cent year-on-year.

The core inflation growth for July was higher than economists’ forecast of 3 per cent.

The rising core inflation is a sign that President Donald Trump’s tariffs have started raising costs for American companies and consumers.

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The core inflation, which excludes volatile food and energy costs, is a better marker of inflation — particularly as gasoline prices were down 9 per cent because of the oil prices consistently falling in recent weeks. On account of low gasoline prices, the overall inflation in July rose 2.7 per cent year-on-year.

Goods that saw prices surge in July were footwear, furniture and bedding, recreation, household furnishings and operations, and used cars and trucks, and medical care saw costs rise in the services sector. Airline fares also jumped 4 per cent.

Thei six-month high inflation growth comes after a damning jobs report for the month of July that showed that the US economy added just 73,000 non-farm jobs compared to 104,000 expected by economists. Moreover, the report found that unemployment rate rose to 4.2 per cent from 4.1 per cent the month before.

Moreover, the July jobs report revised numbers for May and June downward that showed that job growth was a mere trickle under Trump. The report May’s new jobs to 19,000 from 144,000 June’s new jobs to 14,000 from 147,000 initially reported.

Trump’s tariffs are finally kicking in

The rising costs, falling job growth, and rising unemployment show that Trump’s tariffs and economic policies have finally started blowing up the US economy.

In the initial weeks and months, the rise in prices was subdued as previous inventory was being cleared and sellers were reluctant to pass on the increased cost to consumers. But now consumers have started to feel the pinch.

The share of tariffs that consumers ultimately pay has been rising over time, starting at only 22 per cent of tariff costs and it is expected to rise to 67 per cent of increased costs by October, according to an analysis by Goldman Sachs carried by The New York Times.

This suggests that Trump’s tariffs will raise costs for Americans more in the coming months.