Republicans say price report is a boon; Democrats say bust. Who’s right?

Does the latest United States user terms scale (CPI) study amusement that Americans are paying much oregon little for goods? You mightiness beryllium seeing mixed messaging based connected the politicians you perceive to oregon what your societal media algorithms surface.

Some accidental the numbers amusement President Donald Trump’s success. Others accidental the opposite.

Every month, the national Bureau of Labour Statistics publishes the user terms index, which measures terms changes for goods and services, including food, apparel, gasoline and housing. The study is utilized to measure economical stableness and pass argumentation decisions.

Republican Senator Rick Scott of Florida celebrated the July study connected the time of its release.

“Another period of ostentation coming successful lighter than expected. That’s GREAT NEWS for Florida families, and different reminder to spot successful Pres. Trump!” Scott posted connected August 12 connected X, alongside a abbreviated Fox Business clip astir vigor and state terms decreases.

US Representative Kathy Castor, a Democrat from Florida, had a antithetic take.

“Trump is raising your market measure to enactment the wallets of his billionaire friends. Nothing large astir this for American families crossed the country,” Castor wrote successful an August 12 X station that included a nexus to a CBS News communicative that said successful its header that the scale roseate successful July by 2.7 percent connected an yearly basis.

Economists told PolitiFact this muddled framing isn’t new, and radical from antithetic governmental tribes usage varying metrics to reenforce their views. They said the afloat representation connected the economy’s wellness and trajectory needs much clip to travel into focus.

Overall, the report’s numbers are “another dose of humble atrocious news,” said Douglas Holtz-Eakin, president of the centre-right argumentation institute American Action Forum. “It’s not melodramatic yet, it’s not a crisis, but it’s not positive.”

Trump’s tariffs, wide watched to spot however they impact user prices and inflation, are inactive caller and some just went into effect in August.

“Since astatine slightest 2021, the CPI reports person go a partisan battleground with some sides cherry picking the information to champion enactment their argument,” said Jason Furman, an economist and prof astatine Harvard University’s John F Kennedy School of Government who antecedently served arsenic an economical advisor to erstwhile President Barack Obama. “And determination is truthful overmuch information successful the CPI study that determination is ever immoderate mode to portion and dice it to enactment conscionable astir immoderate view.”

The CPI study and its meaning

For July, CPI accrued 0.2 percent compared with the erstwhile period and 2.7 percent from a twelvemonth ago. That’s somewhat cooler than the 2.8 percent emergence economists had forecast, acknowledgment to declines successful gasoline and vigor prices.

Gary Burtless, elder chap astatine the Brookings Institution, said the 2.7 percent 12-month emergence successful user prices for each items is simply a “bit little than it was astatine the commencement of 2025,” to Trump’s advantage. But the fig is besides a spot higher than it was from March to July, helium said, an vantage for Trump’s critics.

A abstracted measure, halfway ostentation – which excludes nutrient and vigor due to the fact that they are considered volatile measures prone to large, accelerated fluctuations – accrued 0.3 percent for July and 3.1 percent from a twelvemonth ago. This is the archetypal clip yearly halfway inflation, which officials usage to show underlying, longer-term ostentation trends, has risen supra 3 percent successful respective months. This outpaces Federal Reserve projections earlier the 2024 election, which projected 2.2 percent median halfway ostentation for 2025.

“Economists thin to absorption connected the halfway due to the fact that it is little erratic than nutrient and vigor prices,” said Dean Baker, cofounder of the wide Center for Economic and Policy Research. “Food and vigor prices are precise important, but large changes successful either absorption thin to beryllium reversed. Therefore, it is often much utile if we are looking for aboriginal trends to look astatine the halfway index.”

Despite the uptick, the study was mild capable for investors, arsenic US stocks closed adjacent a grounds precocious connected August 12. The banal marketplace appears, for now, to beryllium focusing connected the likelihood that the Federal Reserve volition chopped involvement rates successful September, fixed concerns astir a cooling labour market. Central slope officials, to Trump’s disapproval, person held rates dependable successful 2025 arsenic they hold to spot tariffs’ effects connected the economy.

The July information comes amid a Bureau of Labor Statistics shake-up. After the agency’s downward revision of May and June employment data, Trump fired bureau Commissioner Erika McEntarfer, accusing her of governmental bias. Trump nominated E J Antoni, an economist astatine the blimpish Heritage Foundation who has criticised the bureau, arsenic the agency’s new commissioner.

The agelong and winding roadworthy of Trump’s tariffs

As the Trump medication highlights the postulation of astir $130bn from the new tariffs truthful far, galore economists expect that businesses volition statesman passing connected the further costs to US customers.

Goldman Sachs estimated successful an investigation shared with Bloomberg that US companies person truthful acold absorbed the bulk of tariff costs – astir two-thirds of the levies – portion consumers absorbed astir 22 percent of the costs done June.

But Goldman Sachs said it expects the user stock of the costs to soar to 67 percent by October if the tariffs travel erstwhile patterns of however import levies affected prices.

Trump wrote successful an August 12 Truth Social post that Goldman Sachs CEO David Solomon should regenerate its economist. “It has been proven, that adjacent astatine this precocious stage, Tariffs person not caused Inflation, oregon immoderate different problems for America, different than monolithic amounts of CASH pouring into our Treasury’s coffers,” Trump wrote.

Some US companies person avoided passing on higher prices by stockpiling goods ahead of the tariffs’ implementation. Others person absorbed costs to debar losing customers oregon are holding disconnected successful hopes that courts nix the tariffs.

“That’s conscionable businesses making concern decisions,” said Holtz-Eakin, from the American Action Forum. “But determination volition beryllium a constituent if the tariffs enactment successful spot astatine the existent levels, wherever that conscionable won’t beryllium feasible immoderate more.”

Many studies of past tariffs person recovered that they harm the economy and rise user prices.

For now, however, experts agreed that the US economy is successful a wait-and-see moment.

Burtless, from Brookings, believes that the effects of tariffs connected user prices are humble truthful far, and that terms increases crossed antithetic categories of goods and services look “inconsistent with the thought that tariffs are the main operator of wide inflation”.

“That whitethorn crook retired to beryllium the lawsuit successful the future,” helium said, “but not yet.”

Holtz-Eakin besides warned astir putting excessively overmuch banal successful a azygous report.

“Never judge 1 month’s data,” helium said. “That’s a regularisation of beingness if you’re doing argumentation work.”