The Open Bell — Ep. 037 — 12 Aug 2026

Today on The Open Bell: The July inflation number just came in hotter than expected, and the reason is pretty direct: the collapse of US-Iran peace talks sent oil prices climbing, and that cost has now worked its way into your grocery receipt and your petrol bill in one clean, ugly line. The 50% tariff on Canadian imports takes effect in seven days, and the uncomfortable part isn't just the price of cheese and butter going up before Labour Day, it's that the Fed has to sit on its hands and watch inflation climb from two directions at once while deciding whether to raise interest rates. If today's episode helped you make sense of what's actually going on with prices right now, a five-star rating takes about ten seconds and helps the next person find the show. Hosted by Alex Monroe. New episodes every weekday morning at theopenbell.co Not investment advice. For informational purposes only. --- Chapters: 00:00 Introduction 00:15 US July CPI Surges Back as Oil Pass-Through Hits Consumers 03:06 US Canada Tariff Clock Ticks: 50% Levy Takes Effect August 1 05:32 Closing thoughts

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Good morning. It's Wednesday, twelfth August 2026, and this is the Open Bell. I'm Alex Monroe. The inflation report dropped at 830 this morning. The number the Federal Reserve has been dreading, the one market's pre-positioned for all week, is here. Let's get into it. Yesterday, JP Morgan's trading desk warned that a hot July CPI print combined with oil near $80 could be enough to tip the Fed toward a September hike. That print is now in hand, and the oil passed through the Fed has been watching for is exactly what showed up. Here's the context. In June, headline CPI, the consumer price index, the broadest monthly measure of what Americans actually pay for things, fell four tenths of a percent in a single month. That was the largest one-month drop since April 2020. The reason was a brief window of ceasefire optimism around the Strait of Hormuz, which temporarily dragged energy prices lower. That window closed, Iran walked away from talks, the strait stayed shut, and Brent crude, the global oil benchmark, climbed back above $82 a barrel by the time this morning's report was compiled. July's CPI was expected to reverse roughly half of June's drop, with forecasters penciling in a two-tenth of a percent monthly rise and a year-on-year rate of around 3.4%. The energy component alone, petrol, airfare, utilities, tracks crude prices with a lag of a few weeks. When Brent rises more than 20% over the course of a month, that doesn't stay at the refinery. It moves through the supply chain and lands on your receipt. The number that matters almost as much as the headline is core CPI. That's the measure that strips out food and energy to show underlying price pressure. In June, core was flat month on month and running at 2.6% annually. If July's core stays anchored near that level, the Fed has a genuine argument that this is an energy shock, not a broad reacceleration, and holding rates make sense. If core ticks up alongside the headline, the argument for hiking gets harder to ignore. The Federal Reserve already had three officials vote in favor of a rate hike at its July meeting. Three dissenting votes in one session is unusual and it signals real internal division. A hot print today doesn't just affect September's decision. It reshapes how the next 12 months of borrowing costs look for anyone with a mortgage, a car loan, or a credit card balance that adjusts with the rate environment. The contrarian case is real. If any Hormuz deal materializes, the energy component reverses quickly. Oil drove this, and oil could undrive it. But right now, there is no deal. Iran replaced its lead negotiator with a revolutionary guards commander who is on record skeptical of talks. Betting on a near-term diplomatic resolution is a low probability trade. The uncomfortable truth is that this CPI report isn't really about the Federal Reserve's models or core versus headline. It's a direct invoice for a geopolitical crisis that has no clear resolution date. Every extra dollar on a barrel of crude finds its way into a tank of petrol, a flight booking, and eventually a supermarket shelf. And that cycle is still running. That same inflationary pressure doesn't stop at the pump. Starting next Tuesday, it gets a second engine. On August 19th, the Trump administration's 50% tariff on roughly $16 billion of Canadian imports takes effect. The goods on that list are not abstract trade categories. They're dairy, agriculture, furniture, and alcoholic beverages, things bought at supermarkets and home improvement stores, bought regularly, and bought regardless of price because demand for butter and milk doesn't collapse when costs rise. Economists call that inelastic demand. What it means practically is that importers pass the cost on, retailers pass it on again, and you pay it. The Tax Foundation, a nonpartisan research group that tracks tax and trade policy, calculates that the full package of tariffs the Trump administration has put in place this year covers nearly a trillion dollars of annual imports in total and amounts to a $900 tax increase per US household for 2026. That figure was already in the calculation before this morning's CPI print. It is now sitting alongside an oil-driven inflation surge at the exact moment the Fed is deciding whether rates need to go higher. Canada is preparing retaliatory measures. There are reports of back channel talks, and some trade analysts expect the 50% rate to be softened or delayed before August 19th, similar to the 30-day reprieves granted to Canada and Mexico earlier this year. That's possible. It's also been said before. The 2018 to 2019 tariff escalation with China followed the same pattern of threatened rates, partial delays, and eventual implementation. And when the tariffs on around $370 billion of Chinese goods finally stuck, consumer prices on electronics and appliances rose by up to half a percentage point of CPI. $16 billion of Canadian goods is a smaller base, but the categories hit harder food and drink, not semiconductors. The Fed's problem is that it cannot wait to see whether Ottawa and Washington reach a deal before making its September rate decision. It has to act on current and projected price data. Tariff-driven goods, inflation, and oil-driven energy inflation are not the same mechanism. One is a supply shock, one is a policy choice, but they land in the same place. The CPI basket, the household budget, and the Fed's calculations. $900 per household across an already strained consumer economy with more price pressure arriving at supermarkets the week before Labor Day. And the Fed has to watch all of that in real time while deciding whether to make borrowing more expensive on top of it. What today's stories have in common is that the forces pushing prices up right now are not coming from an overheating economy. They're coming from a closed waterway and a trade policy decision. That distinction matters because the Fed's usual tools, rate hikes, are well designed to cool demand but poorly suited to fixing a diplomatic standoff or a tariff schedule. We're using monetary policy to manage problems that monetary policy didn't cause. The next scheduled Federal Reserve decision is September 17th. Between now and then, the data the committee watches most closely is the core CPI trajectory, which July's print has just updated, and any movement on Hormuz. Those are the two things worth tracking. If you want today's numbers in front of you in writing, the newsletter has everything. It's free and the link is in the show notes. That's the open bell. I'm Alex Monroe. Have a sharp morning.