Inflation Is Tamer Than Expected, With an Asterisk

Tuesday's highly awaited inflation report amid a slew of new tariffs offers a mixed narrative about the economy:

• Main number: Overall inflation came in tamer than expected in July: Prices rose 2.7% compared to last July, a tick below the Wall Street consensus of 2.8%, reports CNBC. The annual figure of 2.7% is the same as June's, per the AP.
• 'Core' concern: However, the closely watched measure of core prices—which strips out volatile food and gas prices—rose 3.1%, which is a tick above forecasts of 3% and the fastest annual pace in five months, reports the New York Times. Economists see core prices as a better gauge of underlying trends, notes the Wall Street Journal.

• Monthly: On a monthly basis, July prices rose 0.2% from June and core prices rose 0.3%, both in line with expectations.
• Markets: Investors on Wall Street seemed pleased with the new numbers overall, with Dow futures jumping more than 200 points. The odds of a rate cut from the Federal Reserve next month is now 91%, up from 85% before the report's release, per CNBC.