CPI rose in July by 2.7% on an annual basis. Here’s what that means.

The Consumer Price Index in July rose 2.7% on an annual basis, slightly cooler than economists had forecast.

By the numbers

The CPI was expected to rise 2.8% last month, according to economists polled by financial data firm FactSet.

On a month-over-month basis, the CPI rose 0.2%, in line with economists’ forecasts.

The CPI, a basket of goods and services typically bought by consumers, tracks the change in prices on everyday items such as food and apparel over time. So far this year, inflation has stayed at 3% or lower. June’s CPI reading was 2.7%.

So-called core inflation, a measure or CPI that excludes food and energy prices (which are more volatile), rose by 3.1% over the past 12 months, the highest level in five months. Economists polled by FactSet had predicted a 3% increase for that measure.

Food prices rose 2.7% on an annual basis last month, the same as the overall inflation rate.

Items that have seen big cost increases since last July include roasted coffee, up more than 14.8% and ground beef, which is up 11.5%. Egg prices declined 3.4% from June to July but are still up 16.4% since last year.

Food away from home, which tracks the price of restaurants and other eateries, rose 3.9% over the past year.

Gasoline prices, meanwhile, dropped 9.5% in July from a year earlier, the CPI data shows.

What the experts say about the impact of tariffs

Economists have been watching closely to determine how tariffs might trickle through to the CPI data. For the first several months of the year, the impact appeared to be limited, but June’s reading indicated that the levies might be starting to drive up prices in certain categories such as apparel, home furnishings and appliances.

Goods from more than 60 countries and the European Union are now subject to a new round of reciprocal tariffs that went into effect on Aug. 7.

The figures from today’s CPI report suggest that slowing cost growth cheaper gas is offsetting some of the impact of President Donald Trump’s sweeping tariffs.

“There is some sign of tariff pass through to consumer prices but, at this stage, it is not significant enough to ring alarm bells,” Seema Shah, chief global strategist a Principal Asset Management, said in an email to CBS News after today’s CPI report was released.

During a call with media yesterday, Alan Detmeister, an economist at UBS, said the investment bank expects consumers will start to see the direct effects of the tariffs this year or into early next year.

“It’s possible that these tariff-induced price increases are a one-time price level shock that will start coming down early next year,” said Detmeister. “We think they’re going to be much more lasting.”

What the inflation data could mean for a Fed rate cut

Analysts say that a Fed rate cut in September is likely still on the table.

“Although core annual inflation is back to its highest level since February, today’s CPI print is not hot enough to derail the Fed from cutting rates in September,” said Shah.

The Fed’s mandate is to maintain maximum employment, while keeping prices down. Otherwise, the country could slip into what’s called stagflation — which is when high inflation is coupled with high unemployment.

FactSet gives an 88% probability of a rate cut at the meeting, which is scheduled for Sept. 16 to 17.

The Associated Press contributed to this report.