15 July 2025
If you are covering the latest US inflation data, please find below a comment from Lindsay James, investment strategist at Quilter:
“While US inflation remains on the benign side of things compared to recent history, today’s figures perhaps mask darker signs that may just push the US one step closer to a stagflationary environment. CPI rose 2.7% to June, with Core CPI rising 2.9% over the year - both up on the previous month and moving away from the Federal Reserve’s 2% target.
“It is now seeming likely that the second half of the year will see further price pressures, coupled with potentially stagnating growth. So far inflation has been held in check by the high level of inventories built up before Liberation Day. President Trump’s final tariff regime is yet to take shape, but the average effective rate continues to climb, and earlier deals are being reopened. Certainty for businesses remains elusive and as such they may find they can no longer avoid either passing on these higher costs or take a hit to their profit margins.
“Trump continues to bang the drum for the strength of the US economy and the need for lower interest rates, but that is not what the data is suggesting. With labour markets remaining pretty solid so far, the objective of price stability would usually warrant either a hold or a hike in interest rates at the Fed. However, this is no normal Presidency and the constant pressure from the White House and an increasing cacophony of criticism from Trumps political allies may be one factor creating a split in at the Fed, with some members now leaning more dovish, arguably jostling for favour ahead of Trump’s election of a new Fed Chair.”
