In July 2025, the Consumer Price Index (CPI-U) rose 0.2% monthly, reflecting a year-over-year increase of 2.7%. Key drivers included a 0.2% rise in shelter costs, while energy prices fell by 1.1%, driven by a 2.2% drop in gasoline pricing. Core inflation (excluding food and energy) saw a 3.1% annual increase. Notably, the food index rose by 2.9% over the year. Federal Reserve Chair Powell indicated that inflation, although improved from 2022's highs, remains above the 2% target. The Fed's current policy rate remains at 4.25% to 4.5%, with monetary policy being cautiously held as data on economic impacts, particularly from tariffs, are assessed. Consequently, upcoming inflation trends and decisions hinge on effective tariff impacts and maintaining stable price expectations.