US CPI Steady Amid Falling Energy Prices: Insights on Inflation Dynamics and Market Impacts

US Consumer Price Index Holds Steady in July as Energy Prices Ease

By James Hyerczyk
Published: August 12, 2025, 12:39 GMT+00:00

The US Consumer Price Index (CPI) shows steady inflation in July. The index slows as energy prices drop. A fall in energy costs helps balance slow rises in service prices. The Bureau of Labor Statistics (BLS) releases this report. Headline inflation rises 0.2% from last month. It holds an annual pace of 2.7%, a rate just below market views.

Headline Inflation Slightly Below Forecast

In July, prices move up by 0.2%. The yearly CPI growth stays at 2.7%. This rise is close to Dow Jones estimates. The core CPI, which leaves out food and energy, climbs 0.3% over the month. Over the past year, core inflation shows a 3.1% rise. The core rate is a bit higher than the predicted 3.0%. This points to steady price pressures in key areas.

Shelter and Services Remain Main Pushers

The report flags shelter costs as a main driver of price gains. Shelter prices go up 0.2%. Both rent and owners’ rent also grow 0.3%. Medical care prices jump 0.8% as dental and hospital costs rise. Airline fares climb sharply by 4.0% after a drop in June. Prices for recreation and household items also move higher. These shifts show that the service price rise holds firm.

Energy Prices Ease Inflation Pressure

Energy prices fall by 1.1% in July. Gasoline prices drop 2.2% this month, which adds up to a 9.5% fall over the year. Natural gas prices slip by 0.9%. Electricity falls slightly by 0.1% for the month, yet sits 5.5% above last year’s price. The dip in energy costs helps offset the pressure from other areas.

Food Prices Stay Near Flat

Food prices do not change much in July. Costs for food consumed at home drop by 0.1%. Low prices for eggs (down 3.9%) and nonalcoholic drinks (down 0.5%) help balance a 1.5% rise in beef prices. Prices for food eaten away from home go up 0.3%. Full-service restaurant meals rise by 0.5%, hinting at mild price growth for dining out.

Market and Federal Reserve Issues

A softer headline CPI and lower energy prices may ease some stress on the Federal Reserve. Yet, core inflation stays above 3%, a sign that the Fed may hold a careful view. Bond traders see a calm market in US Treasury bonds as they adjust to the slower inflation pace. The US dollar is likely to remain steady. Stock prices may get small boosts, especially in consumer and transport areas that feel the drop in energy costs. Trade issues and tariff risks may still limit gains.

About the Author:
James Hyerczyk is a seasoned US-based technical analyst and educator with over 40 years of experience in market analysis and trading. He studies chart patterns and price moves. He wrote two books on technical analysis. His work spans both futures and stock markets.

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