Falling gas prices helped keep overall inflation tame in July; however, a broader array of products got even more expensive last month, showing that President Donald Trump’s expansive tariffs are being passed along to consumers.

Consumer prices rose 0.2% in July, keeping the annual inflation rate at 2.7%, according to the latest Consumer Price Index data released Tuesday by the Bureau of Labor Statistics.

Stocks were higher on Tuesday. The Dow rose 480 points, or 1.09%. The S&P 500 rose 0.73% and the Nasdaq Composite gained 0.72%.

“We have seen moderate inflation over the last year … certainly, prices are not going up nearly as quickly as they were a few years ago,” Gus Faucher, senior vice president and chief economist at PNC Financial Services Group, told CNN in an interview. “But I do think that consumers are going to start seeing more price increases at the grocery store, at Amazon, things like that.”

“Consumers are going to start to feel a little more stretched over the next few months as we see more of the impact of tariffs passed through from businesses to consumers,” he added.

However, considering that energy and food prices tend to be quite volatile on a month-to-month basis, the “core” index that excludes those two categories is widely viewed as a good measurement of underlying inflation trends.

Core CPI rose 0.3% from June, the fastest increase since January, which brought the annual rate to 3.1%, the highest in five months.

“Gas prices are down, but we can’t count on that to keep inflation low,” Faucher said. “So, even if energy prices stabilize and gas prices are just stable, then that means that overall inflation is going to be higher, and that is going to put more pressure on consumers.”

The core goods category, which is being closely scrutinized in the wake of higher tariffs, rose 0.2% for the second consecutive month.

Economists had expected inflation to heat up slightly last month, to 0.2% from June and by 2.8% annually, according to FactSet.

While tariff-exposed goods categories did see some price increases in July, the lion’s share of cost pressures came from services, particularly the housing-related shelter category, which has been an inflationary bogeyman in recent years.

Still, overall shelter prices (which include measurements of rents and other housing-related costs) continued to cool from pandemic-era spikes. Prices rose 0.2% in July and eased to 3.7% from a year ago, the lowest 12-month increase since October 2021.

Trump’s sweeping trade policy of tacking steep tariffs on most goods that cross America’s borders are widely expected to result in higher prices for businesses and consumers — although not to the extent seen in 2022 and other high-inflationary periods.

While there may not be a broad-based acceleration in inflation, higher prices anywhere — especially come Back-to-School season and around the holidays — aren’t easy to swallow for many Americans, especially those with little-to-no wiggle room in their budgets.

“The thing to understand is [tariff-induced inflation] is not going to happen with a bang but rather more of a slow deterioration in purchasing power,” Joe Brusuelas, RSM US chief economist, told CNN.

Many economists also believe that tariffs will cause a one-time lift in prices and not necessary a lasting and accelerating surge in price hikes.

There’s a laundry list of reasons why tariff-driven price hikes are a slow boil: Businesses loaded up their warehouses with pre-tariffed goods; higher costs have been split by entities along the supply chain, lessening the blow at the retail store; and Trump’s fits-and-starts approach to tariffs has meant that the bulk of them did not go into effect for months.

At the same time, inflation has remained relatively tame for good and not-so-good reasons: Ongoing deflationary trends in key areas, marking a continued unwinding from pandemic-era shortages and price spikes; falling gas prices (they’re down 9.5% from July of last year); there are many other components of CPI (core goods are just 25%); and then because of depressed consumer demand in areas such as travel.

Monthly economic data can be quite volatile, and economists frequently caution that it’s important to take a longer view. However, CPI reports and, especially, July’s data are bearing hallmarks of higher tariffs, albeit in a scattershot fashion:

Commodities excluding food and gas: Prices rose 0.2% for the second consecutive month after being flat in May. This index excludes volatile food and energy components and is being closely scrutinized in the wake of higher tariffs.

Apparel and footwear: Trump’s tariffs were expected to raise the cost of most clothing and footwear, but the hardest-hit items were expected to be some of the most basic (cheap T-shirts, socks, sneakers and undies). The clothes and shoes that land on retail shelves are largely sourced from countries such as Vietnam and China, which have tariff rates north of 20% and 30%, respectively.

Overall apparel prices nudged up just 0.1% in July after rising 0.4% in June. Footwear, however, shot up 1.4% in July — the highest monthly rate in more than four years — after rising 0.7% in June.

Appliances: This was one of the first categories to show sharper increases in prices. After rising 0.8% in April and May and then 1.9% in June, prices for appliances settled back down in July, falling 0.9%.

Furniture and bedding: Price hikes accelerated in July, rising 0.9% after posting a 0.4% increase in June.

Outdoor equipment and supplies: This import-heavy category saw prices jump 2.2% in July, the highest in more than two years, after falling 0.1% in June.

Sporting goods: The pace of price hikes remained elevated, although not to the extent in June when they rose 1.4%. Prices were up 0.4% in July.

Tools, hardware and supplies: During much of 2023 and 2024, prices fell for this category. However, since April, prices have risen between 1.1% and 1.2% each month (the index was up 1.2% in July.).

Toys: After rising by 1.3% and 1.8% in May and June, respectively. Toy prices inched up 0.2% in July. More price hikes could be coming down the pike, however, Hasbro CEO told CNN’s Audie Cornish recently. The vast majority of toys are produced in China.

Windows and floor coverings and other linens: The US textile industry has shrunk considerably in recent decades, resulting in a high reliance on imported linens. After a record-high 4.2% increase in June, prices rose 1.2% in July.

The tariff pass-through to consumers appeared to be slower in July than it was in June, said Oliver Allen, senior US economist at Pantheon Macroeconomics.

“I don’t think that necessarily means that it’s over, it’s done, or we’ve seen the peak,” he said. “I don’t think that’s the case at all.”

The pre-tariff stockpiling has mitigated some of the price increases thus far; however, it can’t happen indefinitely, he said.

“The question we have on top of that is where does that (price increase) show up? Who eats that? Where does that show up in the supply chain?” he said. “There’s probably going to be some of that eaten into the supply chain, but I think a lot of it is going to be passed on to consumers.”

“But as far as the economy is concerned, either way, it’s not a particularly good outcome,” he said, adding that businesses and consumers will have less money to spend.

As for the Federal Reserve, Tuesday’s inflation data doesn’t necessarily mean the central bank will stay on the sidelines at its upcoming meeting in September, wrote Michael Hanson, senior global economist at JPMorgan Securities.

“Today’s report does not pressure the Fed away from a likely insurance cut at its next meeting given concerns about a weakening labor market,” he wrote in a note Tuesday.

The US labor market appears to be on much shakier ground than was thought heading into the Fed’s last rate decision in late-July. The August 1 jobs report showed that job gains in July were tepid, at 73,000, and that job gains in the two months prior were revised down substantially.

The large downward revisions put the BLS in the crosshairs. Trump fired BLS Commissioner Erika McEntarfer, baselessly claiming she “rigged” the data (an allegation that Trump’s former BLS head and a cadre of statisticians and economists resoundingly disputed).

The upheaval at the BLS does not directly impact July’s CPI report; however, other actions taken by the Trump administration are potentially leaving their mark. The BLS, one of many federal agencies subject to the Department of Government Efficiency’s blunt axe, has increasingly cut back on the data collection that feeds into the critical pricing gauge.

The geographic and sample cuts that have taken places since April aren’t expected to massively affect the overall annual CPI rates; however, they could make the monthly data even more volatile, economists say.

The next big piece of inflation data is due out Thursday when the BLS releases the Producer Price Index, which will provide a look at how prices are changing upstream of the consumer.