Consumer prices rose less than expected in July while workers’ paychecks continued to outpace inflation, according to federal data released Tuesday. The White House reported that real wages have increased 1.3% over the past year, with inflation holding steady at 1.9%.
The figures suggest the economy is moving toward the “soft landing” that policymakers have sought for years, with workers experiencing genuine purchasing power gains and businesses reporting improved confidence.
“Today’s CPI report revealed that inflation beat market expectations once again and remains stable, underscoring President Trump’s commitment to lower costs for American families and businesses,” White House Press Secretary Karoline Leavitt said in the statement. “The Panicans continue to be proven wrong by the data – President Trump’s tariffs are raking in billions of dollars, small business optimism is at a five-month high, and real wages are rising.”
Shelter costs, a key inflation driver, fell to their lowest level since October 2021. Energy prices dropped sharply, with gasoline down nearly 10% from last year.
Back-to-school shoppers are seeing further relief, with smartphone prices plunging 14.7% year-over-year and school supplies and books falling 1.8%. Grocery prices were mixed but trended toward deflation, with egg prices down 20% since January, peanut butter down 3.3%, and frozen vegetables down 2.2%.
Small business optimism reached a five-month high in July, according to a Bloomberg report, with owners citing more upbeat economic outlooks and expanding growth plans.
Other notable price declines included fuel oil (-2.9%), hotels (-4.8%), and internet services (-2.4%). The broad-based drop in consumer goods prices contrasts with the service sector inflation that affected the economy in recent years.