US inflation to rise as higher tariffs feed through

US consumers probably experienced a slight pickup in underlying inflation in July as retailers gradually raised prices on a variety of items subject to higher import duties.

The core consumer price index, regarded as a measure of underlying inflation because it strips out volatile food and energy costs, rose 0.3% in July, according to the median projection in a Bloomberg survey of economists. In June, core CPI edged up 0.2% from the prior month.

While that would be the biggest gain since the start of the year, Americans — at least those who drive — are finding some offset at the gas pump. Cheaper gasoline probably helped limit the overall CPI to a 0.2% gain, the government’s report on Tuesday is expected to show.

Higher US tariffs have started to filter through to consumers in categories such as household furnishings and recreational goods. But a separate measure of core services inflation has so far remained tame. Still, many economists expect higher import duties to keep gradually feeding through.  

That’s the dilemma for Federal Reserve officials who’ve kept interest rates unchanged this year in hopes of gaining clarity on whether tariffs will lead to sustained inflation. At the same time, the labor market — the other half of their dual policy mandate — is showing signs of losing momentum.

As concerns build about the durability of the job market, many companies are exploring ways to limit the tariff pass-through to price-sensitive consumers. Economists expect government figures on Friday to show a solid gain in July retail sales as incentives helped fuel vehicle purchases and Amazon’s Prime Day sale drew in online shoppers.

Excluding auto dealers, economists have penciled in a more moderate advance. And when adjusted for price changes, the retail sales figures will likely underscore an uninspiring consumer spending environment.

Among other economic data in the coming week, a Fed report is likely to show stagnant factory output as manufacturers contend with evolving tariffs policy. 

A preliminary trade truce between the US and China is set to expire on Tuesday, but a move to extend the detente is still possible.

The Bank of Canada will release a summary of the deliberations that led it to hold its benchmark rate at 2.75% for a third consecutive meeting; it also left the door open to more cuts if the economy weakens and inflation is contained. Home sales data for July will reveal whether sales gains continued for a third straight month. 

Elsewhere, several Chinese data releases, gross domestic product readings for the UK and Switzerland, and a possible rate cut in Australia are among the highlights. 

Asia

Asia has a hectic data calendar, led by a wave of Chinese indicators, GDP reports from several economies, and a closely-watched rate decision in Australia. The week will see credit numbers from China, which will be assessed for signs that policymakers’ efforts to revive economic growth are beginning to bear fruit. Money supply data will offer a complementary signal on underlying liquidity conditions.

On Tuesday, the Reserve Bank of Australia is poised to lower policy rates for a third time this year after second-quarter inflation cooled further. A gauge of Australian business confidence due the same day will offer a timely read on sentiment heading into the second half. Wednesday brings Australia’s wages data, followed by the employment report on Thursday.

India reports CPI data on Tuesday, which will likely show prices cooled further in July from a year ago. Wholesale prices follow on Thursday, and will indicate whether cost pass-through remains muted. 

Trade figures during the week will show how strong India’s external sector was before Trump imposed an additional 25% tariff on Indian goods over its ongoing purchases of Russian energy, taking the total import levy to 50%.

On Wednesday, Thailand’s central bank is expected to cut rates amid subdued price pressures and weak economic growth. 

Thailand’s King Maha Vajiralongkorn has endorsed the appointment of Vitai Ratanakorn as the nation’s new central bank governor, capping a monthslong selection process that has been overshadowed by concerns over government attempts to erode the autonomy of the Bank of Thailand. Vitai is set to take office from Oct. 1, according to a Royal Gazette notification issued Sunday.

Also on Wednesday, New Zealand releases retail card spending data, South Korea publishes its unemployment rate for July, and Japan releases its producer price index — a gauge of wholesale inflation.

China’s big reveal comes on Friday, with a suite of July activity data including industrial production, retail sales, fixed asset investment, and jobless figures. 

Also on Friday, Japan publishes preliminary estimates of second-quarter GDP, with forecasts suggesting the country likely avoided a recession.

Singapore, Malaysia, Taiwan and Hong Kong are among the other economies reporting GDP, providing a broader look at growth momentum and external balances across the region.

• For more, read Bloomberg Economics’ full Week Ahead for Asia

Europe, Middle East, Africa

The UK will take prominence again with some key data reports. Following Thursday’s Bank of England rate cut, after which officials said they’re on “alert” for second-round effects from a spike in inflation, wage data will be released on Tuesday. Economists anticipate a slight slowdown in pay growth for private-sector workers. 

Meanwhile, second-quarter GDP is expected to show economic momentum slowing sharply after a growth spurt at the start of the year, meshing with the BOE’s view that the economy has started to show more slack.

Much of continental Europe will be on holiday on Friday, and data may be sparse too. Germany’s ZEW index of investor sentiment comes on Tuesday. In the wider euro region, a second take of GDP, along with June industrial production, will be published on Thursday. 

In Switzerland, still reeling from Trump’s imposition of a 39% tariff, initial data on Friday may reveal that the economy suddenly contracted in the second quarter, even before that trade shock hit. Investors will also be watching for any update on Bern and Washington inching toward a trade deal after all.

Norwegian inflation is set for Monday. Three days later, the central bank in Oslo is likely to keep its rate at 4.25% after its first post-pandemic cut in June surprised investors.

Recent data included weaker retail sales, rising unemployment and gloomier industrial sentiment, though price pressures have also appeared to be stickier. Most economists expect two more quarter-point cuts in Norway this year, in September and December.

Some monetary decisions are also due in Africa:

• On Tuesday, Kenya’s central bank will probably adjust the key rate lower for a seventh straight time, from 9.75%, with inflation expected to remain below the 5% midpoint of its target range in the near term.
• Uganda’s policymakers will probably leave their rate at 9.75% to gauge the impact of US tariffs on inflation and keep local debt and swaps attractive to investors.
• On Wednesday, the Bank of Zambia may cut borrowing costs. Its real interest rate is the highest in six years, with the spread between the policy benchmark and the annual inflation rate at 1.5 percentage points in July after price growth eased.
• Namibia may also lower its rate, to 6.5% from 6.75%, in a bid to boost the economy. Inflation there is near the floor of its 3% to 6% target range.

In Russia on Wednesday, analysts expect inflation to have fallen below 9% in July from 9.4% a month earlier. 

Turkish central bank Governor Fatih Karahan will present the latest 2025 inflation outlook at a quarterly meeting on Thursday. 

And finally, on Friday in Israel, inflation is expected to have eased to 3.1% in July from 3.3% a month earlier. 

• For more, read Bloomberg Economics’ full Week Ahead for EMEA

Latin America

Brazil’s central bank gets the week rolling with its Focus survey of market expectations. Analysts have been slowly trimming their consumer price forecasts, but all estimates remain well above the 3% target through the forecast horizon.

Data on Tuesday should show that Brazilian consumer prices for July ticked down ever so slightly from June’s 5.35% print, substantiating the central bank’s hawkish rate hold at 15% on July 30.

Chile’s central bank on Wednesday publishes the minutes of its July 29 meeting, at which policymakers delivered their first cut of 2025, voting unanimously for a quarter-point reduction, to 4.75%. The post-decision statement maintained guidance for more monetary easing in the coming quarters due to a weak labor market and slowing inflation.

Also due on Wednesday is Argentina’s July consumer prices report. Analysts surveyed by the central bank expect a slight uptick in the monthly reading from June’s 1.6%, with the year-on-year figure drifting lower from 39.4%.

Inflation in Peru’s megacity capital of Lima has been below the 2% midpoint of the central bank’s target range all year, but the early consensus expects the central bank to keep its key rate unchanged at 4.5% for a third straight meeting.

Colombia is all but certain to have posted an eighth straight quarter of growth in the three months through June.

The nation’s central bank, which in June highlighted that the economy had gained momentum, is forecasting a 2.7% rise in GDP this year and 2.9% in 2026, up from 1.7% in 2024.

This story was originally featured on Fortune.com