The inflation report can show that consumer prices increased, but the Joker is Trump

A key report on Tuesday should show that the inflation rate increased in July, a potential indication that President Donald Trump’s prices are increasingly weighing on consumers.

Trump’s reaction to the report – especially if it shows the heating of inflation – could be even more important after shooting the head of the federal agency behind the data.

Trump accused the senior office of Labor Statistics, Erika Mcentarfer, allowing the agency to handle job data, an allegation that does not remain founded. His dismissal last week sparked alarms through Washington and among most traditional economists, who say that could affect the integrity of data from the Labor Department. Although the data is systematically subject to revisions, there is no evidence that changes are politically motivated.

A BLS spokesperson said that the consumer price index report on Tuesday, which measures the growth in paid by consumers, would not be affected by Mcentarfer’s eviction. No official change in his methodology was announced last week.

The president is particularly surrounded by data now in the midst of growing signs that his unprecedented pricing strategy disrupts the economy. Even if he maintains that commercial functions make the United States “strong and rich,»Recent employment growth has been anemic and increasingly concentrated in a narrow set of sectors like health care and local states and governments.

The impact on consumer prices seems to be even more pronounced. The prices are taxes collected by the government on imported goods, of which hundreds of billions take place in the United States each month.

There has been a debate on which really ends the cost of import taxes, which economists are suitable as inflation. Goldman Sachs analysts now estimate that consumers have paid around 22% of pricing costs until June. In a note to customers, they said that this figure could reach up to 67% by the end of the year, companies and supply chains adapt to the new diet. In this scenario, a separate inflation measure preferred by the federal reserve would drop to 3.2% in December, well in advance on the official objective of the central bank by 2%, analysts said.

Some economists are now raise the perspective That prices push the American economy to stagflation, where the labor market is even weakened as price growth is accelerating.

This is considered to be one of the worst scenarios for the federal reserve, which is responsible by the Congress to maintain unemployment and the low inflation rate. The president of the Fed, Jerome Powell, said that if it was not for Trump’s prices, the Fed would now have reduced interest rates in order to make borrowing in the economy cheaper and strengthen employment.

Under current conditions, with increasing price pressures, reduction rates become more difficult.

“In a stagflationist environment, it is dangerous to reduce without clear evidence that inflation has culminated,” the economists of Bank of America wrote in a recent note to customers. In other words, the drop in rates too early is likely to turn on inflation pressures by increasing overall economic activity.

Two of the people named by Trump’s Fed have a different opinion. In remarks presented on Saturday, Michele Bowman, vice-president for the supervision of the Fed, said that any inflationary impact from prices should be considered a “only-off”, and that the exclusion of these effects reveals a rhythm of price growth which is much more moderate. Fed Governor Chistopoher Waller Offered a similar point of view earlier this month.

“Standard central bank practice is to” look “such effects in terms of price as long as inflation expectations are anchored, which they are,” said Waller.

This point of view is not shared by Powell, who said that it was not clear if the inflationary impact of the prices would be short -lived.

“It is also possible that the inflationary effects are rather more persistent”, ” He said in the testimony of the congress in June. “Avoiding this result will depend on the size of the pricing effects, on the time they need to go fully in prices and, finally, on the maintenance of long -term inflation expectations well anchored.”

Some economists believe it could take So 18 months For the impact of prices to make your way through the economy.

“Most of the effects is still ahead of us,” said Diane Swonk, chief economist of the KMPG consulting company, said the program “Today”.

Beyond the prices, consumers continue to feel the pinch of high prices on a variety of fronts, which the president promised to address the campaign campaign last year. Price of chopped beef are now at a top of all time as The droughts devastated the number of herds. Electricity prices are also Now to filesWhile owners’ insurance costs have also started to reactive. While the weekly gains adjusted to inflation checked the last trimesterAbout 43% of workers have seen their pay checks increase less than the cost of living in June according to, the most concentrated at the low to average of the pay spectrum, Indeed in fact.

A separate measure of current and future family financial situations followed by the research and board of directors of the board of directors deteriorated in JulyThe share of consumers expecting a recession in the next 12 months still higher than the levels observed in 2024.

Last month, CNBC Price movements followed On 50 items at Walmart, by finding some, some have increased up to 50%. Walmart said that “price fluctuations are a normal activity course and are influenced by a variety of factors.”

Earlier this year, a Walmart executive was more direct on impact rates.

“We are wired at low prices every day, but the extent of these increases is more than any retailer,” said Director of Financial Officer John David Rainey said to CNBC in May.