U.S. Inflation Continues to Ease as Core Goods Prices Remain Lower Than Global Peers
Inflation Picture Shows Signs of Stabilization
Inflation in the United States has continued its downward trajectory, with the headline Consumer Price Index rising at just 1.9 percent on an annualized basis from January through July 2025, according to new economic data released this week.
The July CPI rose 0.2 percent on a seasonally adjusted basis after a 0.3 percent increase in June, with the 12-month figure settling at 2.7 percent, the Bureau of Labor Statistics reported. These numbers reflect a broader cooling trend that has persisted throughout 2025, particularly in core goods inflation, which has increased by just 1.2 percent over the past year.
“Core goods inflation has increased globally over the past 12 months. Even with the increase, core goods inflation in the United States remains at a low level,” the White House Council of Economic Advisers noted in a recent analysis. “It’s also lower than in other countries. Based on core goods inflation in other countries this year, we would have expected core goods prices to have increased by more than they actually increased from January through July.”
Food Prices Stabilize After Earlier Increases
Food prices, which had been a persistent pain point for consumers in previous years, showed signs of stabilization in July, remaining unchanged overall for the month. A closer look reveals some movement within food categories: prices for food away from home rose 0.3 percent while food at home fell slightly by 0.1 percent.
What’s driving these changes? The USDA Economic Research Service indicates that from June to July 2025, prices declined for eight food-at-home categories while increasing for six and remaining stable for one. Overall, food prices in July 2025 stood 2.9 percent higher than a year earlier.
The forecast for grocery prices (food-at-home) suggests an increase of 2.2 percent for 2025, which is actually below the 20-year historical average of 2.6 percent – a welcome relief for household budgets still recovering from the inflation surge of recent years.
Energy Costs Provide Some Relief
Energy prices have become a bright spot in the inflation picture, dropping 1.1 percent in July with gasoline prices falling 2.2 percent over the month. The White House has been quick to highlight this trend, noting that “gasoline prices have fallen each month since President Trump took office, down 2.6% over the past month and down 12% over the past year.”
This decline in energy costs has helped offset increases in other categories, contributing significantly to the overall easing of inflation pressures.
Broader Economic Context
The second quarter of 2025 showed headline CPI inflation at 2.7 percent over twelve months, influenced partly by base effects from 2024. The Treasury Department observed that “on a monthly basis, food price inflation resumed a slowing trend in the second quarter. After rising by 0.3 percent, on average, during the previous two quarters, food inflation slowed to an average 0.2 percent per month in the second quarter.”
Is this the new normal? Some economists believe we’re finally seeing a return to the stable, modest inflation environment that characterized the pre-pandemic economy. Core inflation has tracked at about 2.0 percent annually under the current administration, with inflation consistently coming in below economists’ expectations.
That said, certain categories continue to see higher price increases than others. Housing costs, for instance, remain elevated in many markets despite the overall cooling trend in inflation.
International Comparison
Perhaps most notable is how U.S. inflation now compares to other developed economies. America’s core goods inflation rate of 1.2 percent over the past year is lower than many global peers, despite worldwide inflationary pressures.
“Based on core goods inflation in other countries this year, we would have expected core goods prices to have increased by more than they actually increased,” the White House economic team emphasized in their analysis, suggesting that domestic policy factors may be helping to contain price growth.
For American consumers who weathered the storm of post-pandemic inflation, the current trends offer a welcome respite – though the journey back to price stability has been longer and more painful than many expected when inflation first began to surge in 2021.
