U.S. core Consumer Price Index (CPI) inflation was firmer than expected in July, increasing 0.3% month-over-month, similar to June’s gain, and the year-over-year rate ticked up to 2.2%. We have been flagging the risk that businesses could pass on the higher costs associated with import tariffs more aggressively, and early evidence suggests this is happening. We now expect the year-over-year rate of core CPI to drift up to 2.5% over the next several months. While the strong June and July readings are awkward for Federal Reserve officials, who are likely to cut rates again in September and possibly more later this ... (full story)