Consumer prices rose in June as President Donald Trump’s tariffs began slowly moving the US economy.
The consumer price index, a wide range of goods and services costs, rose 0.3% that month to 2.7% inflation for 12 months, the Bureau of Labor Statistics reported Tuesday. The figures were consistent with the Dow Jones consensus, but the annual rate is the highest since February, exceeding the Federal Reserve’s 2% target.
Excluding volatile food and energy prices, core inflation was 0.2% for the month and 2.9% annually, with annual rates in line with estimates. Monthly levels were slightly below the 0.3% gain outlook.
Before June, inflation was generally on a downward slope for a year, with headline CPI at an annual rate of 3% in January, and gradually slowed down over the next few months despite concerns that Trump’s trade war would raise prices.
The June evidence was mixed about how much the rates had an impact on prices, but there were indications that the job was affecting it.
Vehicle prices fell that month, with new vehicles falling 0.3%, while cars and trucks fell 0.7%. However, tariff-sensitive apparel prices rose 0.4%. Home furniture affected by tariffs increased by 1% that month.
Shelter prices rose just 0.2% that month, but BLS said the category remains the biggest contributor of overall CPI profits. The index has risen 3.8% from a year ago. Within the category, measurements of what homeowners feel they can receive if they rent an asset has increased by 0.3%. However, I slid 2.9% away from my home.
“It’s really hard to point out the details of this report or the report and say, ‘Yeah! Look at what happened to prices due to the tariffs’,” said Dan North, senior economist at Allianz Trade North America. “These are going to increase, and we’ll be passing it on to consumers, and I think it’ll still be, but so far, this report doesn’t exist.”
Trump used the report to launch another call for the Fed to lower interest rates.
“Consumers are low. Lower the Fed rates now!!!” The President posted to the Truth Society. He later added:
Indicator Mixed Bag
Price pressures came from a variety of sources, but other regions have been eased.
Food prices rose 0.3% that month, increasing annually to 3%, but energy prices reversed their losses in May, rising 0.9%, but have fallen slightly from a year ago. Medical services increased by 0.6%, while transportation services rose by 0.2%.
BLS said that inflation-adjusted hourly wage revenue fell by 0.1% in June as prices rose. Real revenue increased by 1% per year.
The market mainly covered the inflation report roughly. Stock market futures were mixed, but the Treasury yields were mostly negative.
Amid a previously suppressed inflation rating, Trump has urged the Federal Reserve to lower interest rates it has not been in since December. The president argued that tariffs have not exacerbated inflation, and argued that the Fed’s refusal to ease is to raise the costs the US has to pay for the issue of burgeoning debt and deficits.
The central banker led by Chairman Jerome Powell refused to be upset. They argue that the US economy is in a strong enough position because it can afford to wait to see the impact it has on inflation. Trump has in turn called on Powell to step down and is confident that he will name someone else to work in May 2026 when his term as chairman expires.
The market expects the Fed to remain on hold when it meets at the end of July and cuts by a quarter percentage point in September.
