Washington D.C — Today, the Federal Reserve’s preferred measure of inflation revealed that prices in July continued to rise – higher than economists expected. This latest report shows that Americans are increasingly struggling to handle higher prices, as consumer spending on goods has dipped. The key culprits of these persistently higher costs are Republicans’ tariffs and their unnecessary war in Iran.
Gas prices remain above $4.00 per gallon and the average price of diesel is nearing a record high. This inflation report also comes as President Trump is escalating Republicans’ reckless trade war with steep new tariffs on Canada, which are expected to push up costs even higher for Americans. States like Wisconsin, Michigan, Maine, Iowa, and more are going to feel the brunt of this trade war, which will impact vital products and industries such as aluminum, steel, cars, seafood, and more.
“Today’s inflation report shows that Republicans in Congress should be focused on lowering costs for their constituents, rather than backing another costly trade war,” said Unrig Our Economy spokesperson Robyn Patterson. “Sadly, they’ve shown no sign of backing down. Working families are sick of the high cost of gas, groceries, and health care, but Republicans in Congress continue to make each of these costs more expensive. It’s time they stopped backing cost-raising tariffs and repealed their cuts to Medicaid and SNAP.”
CBS News: July PCE inflation index held at 3.7% annual pace, slightly hotter than expected.
Key Points:
- The Personal Consumption Expenditures index — the Federal Reserve’s preferred inflation measure — held at a 3.7% annual pace in July, slightly higher than forecasted and reflecting persistent cost pressures for consumers.
- Economists polled by FactSet had predicted a 3.6% annual increase. Wednesday’s report instead showed that inflation remained unchanged from June.
- The Iran war has pushed up oil and gas prices, eating into consumers’ budgets and putting pressure on household spending.
- “The United States still has an inflation problem. PCE inflation came in hotter than expected,” said Heather Long, chief economist at the Navy Federal Credit Union, in an email. “The impacts of the war in Iran are still apparent with $4 gas and $5.60 diesel.”
- Core PCE, which excludes more volatile energy and food prices, rose at an annual rate of 3.3%, slightly higher than the 3.2% pace predicted by economists and also unchanged from June.
- Consumer spending is showing signs of fatigue from higher prices, with the latest data showing that spending on goods declined by $49.9 billion.
- Separate data released on Wednesday showed the U.S. economy expanded at a 1.5% clip in the second quarter, a sluggish reading in line with the Commerce Department’s first estimate.
- The latest PCE data shows inflation remains stubborn, a challenge for the Federal Reserve as it attempts to rein in prices. Fed officials have held interest rates steady so far this year, although some have signaled they’re open to raising rates to tame inflation.
- Fed Chair Kevin Warsh is scheduled to deliver an address in Jackson Hole, Wyoming, on Friday, where investors will look for clues about the central bank’s next steps.
To learn more about the campaign, visit UnrigOurEconomy.com or contact press@unrigoureconomy.com
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About Unrig Our Economy
Unrig Our Economy is a national campaign to fix the rules of our economy to make it work for working people. We know that when the middle class does well, all of us do well — which is why we’re fighting on behalf of working Americans and holding corporations, their wealthy executives, and the politicians who enable them accountable.