August Monthly

CPI Status Update and Discussion
Traditions Wealth Advisors
Jade Chapman/Brien L. Smith CFP®
Economic Analyst Intern/Chief Investment Officer
August 27, 2025

This week, the U.S. Bureau of Labor Statistics (BLS) released its latest Consumer Price Index (CPI) report, offering an updated snapshot of inflation across the country. The CPI measures the average change over time in prices paid by urban consumers for a set basket of goods and services—everything from groceries and gas to rent and healthcare. It’s the most widely watched measure of inflation and a key factor in shaping interest rate policy, consumer sentiment, and investment strategy.

The CPI is compiled monthly by the BLS, which collects tens of thousands of prices from retailers, service providers, and landlords. The data is grouped into eight major spending categories: food and beverages, housing, apparel, transportation, medical care, recreation, education and communication, and other goods and services. Some CPI versions also strip out volatile food and energy prices to track “core inflation,” which gives a clearer view of longer-term price trends.

In July, headline CPI rose 2.7% year-over-year, holding steady from June. On a monthly basis, prices increased 0.2%. However, the core CPI (which excludes food and energy) rose 0.3% for the month—the largest monthly gain since January—and 3.1% over the past 12 months. This indicates that while energy prices have eased, underlying price pressures in the economy remain somewhat sticky.

Breaking down the numbers, prices continued to rise in service categories such as housing, airfare, and healthcare—particularly dental care. On the flip side, we saw relief in areas like gasoline (down nearly 10%) and groceries, where several staples including eggs and produce saw modest price drops. These shifts reflect a broader pattern: goods inflation has stabilized, while services inflation continues to drive overall price growth.

​Looking ahead, these inflation dynamics are central to how the Federal Reserve will approach interest rate policy. While the cooling in headline inflation supports the case for a rate cut later this year, rising core inflation could give the Fed pause. As always, we are closely monitoring these developments and adjusting our investment outlook accordingly.