A MARTÍNEZ, HOST:
The Treasury Department says it collected $28 billion in tariff revenue last month.
MICHEL MARTIN, HOST:
There are signs that some of that extra cost to importers is being passed along to consumers. This week's inflation report shows evidence of tariff-related price hikes.
MARTÍNEZ: Let's bring in NPR's Scott Horsley. So, Scott, where are the tariffs showing up, and what does it mean for inflation overall?
SCOTT HORSLEY, BYLINE: The government is taxing just about everything the U.S. imports. Not all those costs are showing up at the retail level yet, but consumers are paying more for some items we import a lot of, like furniture and toys. The price of imported foods like coffee and bananas was also up in July, even as overall grocery prices ticked down a little bit. Now, we're likely to see coffee prices climb even more now after President Trump has ordered a 50% tariff on imports from Brazil, the world's biggest coffee producer.
Michael Pearce, who's with the forecasting firm Oxford Economics, says over time, more and more of the tariff price tag is likely to be paid out of consumers' pockets.
MICHAEL PEARCE: We know from those company's plans, they're planning to start raising prices later in the year. So I think it's more a question of when, not if, that we see more increases from tariffs. It's just proceeding at a very varied rate.
HORSLEY: Now, of course, tariffs are not the only factor driving inflation. Last month also saw rising prices for airfares, used cars and rent. That was partially offset by falling prices for gasoline.
MARTÍNEZ: I saw after yesterday's inflation report, Scott, the stock market actually rallied. So why are investors so upbeat?
HORSLEY: Yeah, even though inflation's still elevated, investors are betting it is low enough that the Federal Reserve will see its way clear to cut interest rates when policymakers meet next month. That would be good for stocks. Pearce agrees that a rate cut in September is likely, but he says it's not a slam dunk.
PEARCE: It feels like the Fed is stuck between a rock and a hard place. Inflation is uncomfortably high. Core inflation back above 3%. This isn't where they would like to be.
HORSLEY: Pearce says the only reason the Fed's even talking about cutting interest rates is because central bankers are worried about the sagging job market. You know, we got that jobs report a couple of weeks ago showing weak job growth in July and almost no job growth in May and June.
MARTÍNEZ: Yeah, that's the report that prompted President Trump to fire the head of the bureau that's responsible for gathering all those numbers. So bring us up to speed on that.
HORSLEY: Right. This week, Trump nominated a new person to head the Bureau of Labor Statistics, E.J. Antoni, who's an economist from the Conservative Heritage Foundation. That choice got immediate blowback from economists on both the left and the right.
I spoke to Kyle Pomerleau, who's with another conservative think tank, the American Enterprise Institute. He worries that Antoni is too partisan and too inexperienced and says if he's confirmed by the Senate, he runs the risk of wrecking confidence in the government's economic data. Pomerleau notes that the inflation numbers, for example, are used to adjust tax brackets. And while President Trump might want the government to issue a lowball inflation number for short-term political gain, ultimately, that could backfire by forcing families into higher and higher tax brackets.
KYLE POMERLEAU: We want a good measure of inflation. We certainly don't want to be under measuring or mismeasuring inflation in a way that's going to cause households to face a higher tax burden when they don't need to.
HORSLEY: That's just one example of why it's really important to get these closely-watched economic indicators right and not let them be monkeyed with for partisan political purposes.
MARTÍNEZ: NPR's Scott Horsley. Scott, thank you very much.
HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.
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