Story perspectives

Core CPI Slips to 2.5% as Fed Hike Odds Fall

8/13/2026

Summary

Story summary

Consumer inflation eased to 3.4% YoY in July, down from 3.5% in June.
Core CPI slipped to 2.5% rate in July, below 2.6% in June.
Overall CPI rose 0.1% month-over-month as gasoline fell 2.9% to $4.04 per gallon, 24.6% above a year earlier.
With job losses of 23,000 leaving unemployment at 4.1%, Fed Chair Kevin Warsh said the benchmark will stay at 3.5%-3.75% as hike odds fell to 42%.

History

Historical Context

In 1982, Federal Reserve Chairman Paul Volcker raised the federal funds rate to 20%, forcing inflation from 13.5% down to 3% by 1983. The Federal Open Market Committee’s aggressive tightening cut the consumer price index 12.5 points, while Treasury Secretary Donald Regan reported a $2 billion monthly budget surplus. Today's July CPI slowdown to 3.4% and core CPI 2.5% mirrors Volcker’s late-1980s deflationary phase, as Fed Chair Kevin Warsh now targets a 3.5-3.75% range. The episode taught policymakers that decisive rate hikes can curb price pressures, suggesting current restraint may stabilize inflation without triggering a recession.

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Story summary

Consumer inflation eased to 3.4% YoY in July, down from 3.5% in June.
Core CPI slipped to 2.5% rate in July, below 2.6% in June.
Overall CPI rose 0.1% month-over-month as gasoline fell 2.9% to $4.04 per gallon, 24.6% above a year earlier.
With job losses of 23,000 leaving unemployment at 4.1%, Fed Chair Kevin Warsh said the benchmark will stay at 3.5%-3.75% as hike odds fell to 42%.

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