Why U.S. Inflation Is Edging Up Modestly in 2025
As a politically conservative investor, you’re likely keeping a close eye on the U.S. economy, especially with the Consumer Price Index (CPI) release slated for August 12, 2025. Inflation ticked up to 2.7% year-over-year in June 2025, a slight climb from May’s 2.4%. While this uptick is grabbing attention, it’s a small increase compared to the wild swings of recent years. So, why is inflation rising so modestly, and what does this mean for investors who value economic stability and free-market principles? Let’s dive into the factors behind this delicate economic balancing act, using the lens of a conservative investor focused on protecting wealth and aligning with traditional values.
A Steady Economy Avoiding Past Chaos
The economy in 2025 is in a very different place than it was a few years ago. Back in 2021–2022, we saw supply chain breakdowns from the pandemic and skyrocketing energy prices due to geopolitical messes like the Russia-Ukraine conflict. Those days pushed inflation to a painful 9.1% peak in June 2022. Fast forward to June 2025, and the CPI data shows a much calmer picture: headline inflation at 2.7%, with a monthly rise of just 0.3%. Core inflation, stripping out food and energy, is at 2.9%, up slightly from 2.8%. This modest increase tells us the economy is finding its footing, but it’s a balancing act between growth and price pressures.
What’s Keeping Inflation in Check?
- Energy Prices Are Cooling Off
One big reason inflation isn’t surging is the drop in energy costs. In June 2025, energy prices fell 0.8% from a year ago—gasoline dropped 8.3%, and fuel oil was down 4.7%. For conservative investors like us, who prioritize energy independence and domestic production, this is a mixed bag. Lower energy prices keep inflation low, which is good for the wallet, but they can also squeeze profits for energy companies we might hold in funds like the American Conservative Values ETF (ACVF). The good news? Global supply chains are smoother now, and Norway’s stable oil exports, with its CPI data out today, August 11, are helping keep energy markets steady. - Shelter Costs Aren’t Spiraling
Housing costs, a huge chunk of the CPI, are still rising—up 3.8% year-over-year in June—but they’re not going through the roof like they did a few years back. Rent growth is slowing, and the data suggests that Owners’ Equivalent Rent (OER), a key measure, will cool further by mid-2026. For those of us wary of inflation eating away at our wealth, this moderation is a relief. It means housing isn’t driving a big inflation spike, giving us room to focus on stable, value-driven investments. - Food Prices: Annoying but Manageable
Food inflation is up 3.0% from last year, with groceries climbing 2.4% and eating out jumping 3.8%. Eggs are a sore spot, up 27.3% because of avian flu, but overall, food prices aren’t the runaway train they were in 2022. Improved supply chains and fewer global commodity shocks are keeping things in check. For conservative investors, this supports sticking with consumer staples—think companies in ACVF’s portfolio that avoid progressive agendas while delivering steady returns. - Goods Prices Are Settling Down
Remember when core goods prices (like cars and electronics) were dropping like a rock in 2023–2024? That deflationary trend helped cool inflation but worried investors about demand. Now, in 2025, core goods prices are creeping back up, partly because the U.S. dollar’s a bit weaker and consumer demand’s holding steady. This shift isn’t dramatic, though—it’s just enough to stop deflation without igniting a price surge. For us, this means value stocks, especially in conservative ETFs, are still a safe bet. - Tariffs: A Slow-Burn Impact
President Trump’s tariffs—25% on steel and aluminum, plus duties on Chinese goods—are starting to nudge prices higher. Analysts say tariffs added about 0.3% to inflation in 2025, with businesses absorbing some costs or stockpiling to delay the hit. As conservative investors who back strong trade policies, we see the logic in protecting American industries, but we need to watch how these tariffs might raise costs for goods like electronics or clothing down the line. Domestic-focused companies, which ACVF prioritizes, could be a smart hedge. - The Fed’s Playing It Safe
The Federal Reserve’s keeping the federal funds rate at 4.25%–4.50%, a sign they’re not panicking about this modest inflation bump. After hammering demand with rate hikes in 2022–2023, the Fed’s now in a wait-and-see mode, which aligns with our preference for disciplined monetary policy. This stability lets us keep faith in fixed-income assets like Treasury bonds, which hold up well in a low-inflation environment.
Why the Small Increase? It’s All About Balance So, why is inflation only creeping up? It’s a tug-of-war between forces pushing prices up and others holding them back. Falling energy prices and calmer supply chains are offsetting rises in food, shelter, and tariff-hit goods. A strong job market—unemployment’s at 4.2%, with wages growing 4–5%—keeps services inflation ticking along, but not enough to spark a crisis. Consumers are also spending more on services (like travel or dining) than goods, which eases pressure on retail prices. The result? Inflation’s hovering near the Fed’s 2% target, not shooting past it.For conservative investors, this is a sweet spot. The economy’s growing without the reckless inflation spikes that punish savers. But we can’t get complacent—tariffs or an unexpected energy shock could tip the scales.
What Conservative Investors Should WatchThis week’s CPI release on August 12, expected to show a slight rise to 2.8% headline and 3.0% core inflation, will confirm whether this trend holds. Here’s how to navigate the balancing act:
- Stick with Defensive Sectors: Consumer staples and utilities, often in ACVF, are less rattled by mild inflation and align with our values by avoiding “woke” companies.
- Keep an Eye on Tariffs: Trade policies could push goods prices higher later in 2025. Favor domestic companies to sidestep import cost risks.
- Stay Informed with Trusted Sources: Check Investor’s Business Daily or The Rubin Review for market insights that resonate with conservative principles.
- Hedge Against Future Risks: Gold or Treasury Inflation-Protected Securities (TIPS) can shield your portfolio if tariffs or energy prices stir up inflation later.
Conclusion: Navigating the Tightrope: The U.S. economy in 2025 is walking a tightrope, with inflation rising modestly at 2.7% due to a careful balance of cooling energy prices, steady food and shelter costs, and emerging tariff effects. For conservative investors, this environment offers stability to build wealth while staying true to values like economic discipline and American strength. By focusing on resilient sectors, monitoring policy shifts, and using resources like The Washington Times or Invest Politically, you can keep your portfolio steady on this economic tightrope. The August 12 CPI report will be the next test—watch it closely to ensure your investments stay on solid ground.
