Lindsay James, investment strategist at Quilter, said the latest inflation data was “messy” with figures to support both sides of the debate over whether tariffs will lead to a significant increase in prices.
The report showed price jumps for the one month from June to July for typically imported items such as tomatoes, which rose 3.3%, and coffee, up 2.3%.
Over the same one-month period, prices for rugs and curtains climbed 1.2%, while tools and hardware rose 1.6%.
But many areas that pushed up inflation were in categories not directly affected by tariffs.
The price of air fares, for example, jumped 4% in the year to July while dental services rose 2.6%.
The price of clothing, one of the categories expected to be hardest hit from the new measures, rose just 0.1% over the month, cooling from June.
“In the short-term, markets will likely embrace these numbers because they should allow the Fed to focus on labor-market weakness and keep a September rate cut on the table,” said Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management.
“Longer-term, we likely haven’t seen the end of rising prices as tariffs continue to work their way through the economy,” she added.
The average tariff rate in the US has surged this year, with a minimum tax of 10% in place for most goods since April and certain items, such as cars, hit with higher duties.
Since the latest measures went into effect this month, most goods entering the US are facing taxes of between 10% and 50%, depending on their origin.
Trump has, however, exempted key items including most imports from Canada and Mexico as well as other categories such as oil and smartphones.