The July CPI report has put the Federal Reserve in a “predicament” regarding a September rate cut, as stubbornly high core inflation conflicts with a weakening labor market, fueling fears of “stagflation-lite.”
What Happened: The inflation report, released Wednesday, showed headline annual inflation holding steady at 2.7%, but core inflation—which strips out volatile food and energy prices—accelerated to 3.1%. This rise in underlying inflation for a second consecutive month complicates the Fed’s path, forcing it to weigh its mandate of price stability against supporting a potentially ailing jobs market.
