July's Consumer Price Index came in at 3.4% year-over-year — down from 3.5% in June, with headline CPI rising just 0.1% month-over-month. Core CPI, which strips out food and energy, landed at 2.48% year-over-year. That's the lowest core reading since February.
The number the Fed watches closest came in even better.
SuperCore CPI — core services excluding shelter, the metric Federal Reserve officials have called the most important gauge of underlying inflation — printed at 2.78% year-over-year. That's the slowest pace since September 2021. Before the spending binges. Before the "transitory" gaslighting. Before the war.
The component breakdown tells a clean story. Goods inflation sat at just 0.8% year-over-year. Services inflation came in at 3.0%. Shelter — the stickiest, most stubborn category in the entire index — rose only 0.1% month-over-month, with the year-over-year rate dropping from 3.28% in June to 3.18% in July. Gasoline prices fell 2.9% on the month. Prescription drugs dropped 0.8%.
Energy overall declined 1.5% month-over-month despite running hot on a yearly basis at 14.7%. Food was essentially flat at 0.1% monthly. Even lettuce — yes, lettuce — fell 16.4%, which won't make the cable news chyrons but will show up at the grocery store.
Rate-hike odds slid on the release. JPMorgan's pre-release scenario analysis had pegged a 40% probability of S&P 500 gains between 25 and 75 basis points if core monthly CPI landed between 0.20% and 0.25%. It came in at 0.2%. Markets rallied.
Now rewind two years. The "experts" — the same ones who told us inflation was transitory until it wasn't, then told us it was permanent and structural — spent 2024 and 2025 explaining why a Trump economy would reignite price spirals. Tariffs would spike costs. Deregulation would overheat demand. The deficit would balloon and the dollar would crater.
Core inflation is at its lowest point since February. SuperCore hasn't been this low in nearly five years. Gasoline is dropping. Shelter is finally cracking. The grocery bill is coming down.
Somehow the "adults" who couldn't define "transitory" correctly are still getting booked on cable news to explain what's happening. Meanwhile, the actual data keeps arriving and keeps saying the same thing.
The economy they said couldn't work is working. The inflation they said couldn't cool is cooling. The rate hikes they said were inevitable are fading.
Weird how none of that required a lecture from an economist.