() Inflation ticked upward in July, rising 0.2% for the month and 2.7% for the year, according to Tuesday’s Consumer Price Index report.

This is a breaking news update. Our previous story is below:

The July consumer price index is expected to show a slight increase in the costs of everyday goods a development landing at a critical time for the U.S. economy.

Markets are weighing the impact of President Donald Trump’s sweeping tariffs, a more challenging job market, and mounting “stagflation” concerns.

Stagflation refers to an economy with little to no growth and higher-than-normal inflation. The U.S. has seen it happen before in the 1970s, when the so-called misery index, or the sum of inflation and unemployment, reached 19.9%.

Labor Statistics shake-up puts trust in data at risk

The report will also serve as a test of investors’ trust in U.S. economic data following Trump’s unprecedented dismissal of the Bureau of Labor Statistics commissioner Erika McEntarfer earlier this month over a weaker-than-expected jobs report.

Consumer prices rose 2.7% in June from a year earlier, up from an annual increase of 2.4% in May. On a monthly basis, prices climbed 0.3% from May to June, after rising just 0.1% the previous month.

Trump accused McEntarfer of “rigging” the numbers to make Republicans “look bad,” a move critics say could undermine the integrity of U.S. economic data.

Fed closely watching CPI report

The Federal Reserve will be watching the CPI closely. Even a slight increase would push inflation further from Fed chair Jerome Powell’s 2% annualized inflation goal the threshold he set before he said the Central Bank will cut interest rates, a decision expected next month.

Trump has repeatedly pressured Powell to lower rates and has called him “stupid” for holding off.

Core inflation expected to climb

Core inflation, which excludes gas and energy prices, is also projected to rise.

Economists are eyeing goods most vulnerable to tariffs, such as furniture, auto parts, apparel and personal care, as that will give consumers a clearer measure of how Trump’s tariffs are impacting the economy.

While many companies have been able to absorb some of the shock of the higher costs by stockpiling inventory, analysts warn that buffer won’t last indefinitely.

Trump extends China tariff truce 90 days

Trump signed an executive order Monday, granting a 90-day extension for the U.S. to reach a trade deal with China.

Under the deal, most U.S. tariffs on Chinese goods remain at 55%, in exchange for a commitment from Beijing to boost rare mineral exports to the U.S. and cap tariffs on American goods at 10%.

“We’ve been dealing very nicely with China, as you probably have heard,” Trump said Monday. “They have tremendous tariffs that they’re paying to the United States of America, and we’ll see what happens. The relationship is very good with President Xi and myself.”

The deal gives the two countries another 90 days to reach a permanent solution that would avoid
a trade war and threaten a recession.