June CPI Hits 2.7% Amid Growing Price Pressures
Consumer prices increased by 0.3% in June, bringing the annual inflation rate to 2.7%, the highest level since February, according to data from the Bureau of Labor Statistics. The core inflation rate, which excludes food and energy, rose 0.2% on the month, pushing the year-over-year figure to 2.9%. These numbers align with economists’ expectations, but remain above the Federal Reserve’s 2% target.
The uptick in inflation arrives as President Donald Trump’s tariff policies start to affect the broader economy. Though the direct impact of tariffs on prices is difficult to isolate, categories like apparel and household furnishings — sectors highly sensitive to import duties — showed notable price increases of 0.4% and 1% respectively. In contrast, new and used vehicle prices declined, reflecting continued volatility.
Tariff-Exposed Sectors Show Mixed Results
While not all indicators pointed to clear tariff effects, some goods tied to trade policy posted gains. Apparel and furniture costs, often exposed to import levies, recorded sharp increases. In contrast, vehicle prices saw broad declines: new vehicles were down 0.3% and used cars fell 0.7%. Shelter, the largest single contributor to CPI, rose a modest 0.2% in June but climbed 3.8% annually.
Experts remain cautious. Analysts note that it is still difficult to attribute price changes solely to tariffs. “It’s bound to pass through to the consumers, and I still think it will, but it’s not in this report so far,” said one economist.
Trump Renews Pressure on the Fed
Reacting to the inflation data, President Trump called for the Federal Reserve to sharply lower interest rates. Using Truth Social, he urged an immediate rate cut of 3 percentage points, claiming it would save the U.S. one trillion dollars annually. Trump has long argued that tariffs are not driving inflation and blames the Fed’s inaction for rising debt-servicing costs.
Despite Trump’s calls, the Fed has held rates steady since December, with Chair Jerome Powell signaling a cautious approach. While markets anticipate a possible rate cut in September, Fed officials maintain that inflation remains manageable and prefer to assess further impacts of trade policy before acting.
Wages Lag Behind Prices
Although headline inflation rose, real earnings slipped. Inflation-adjusted hourly earnings declined 0.1% in June, according to a separate BLS report, with annual real wage growth at 1%. Price increases in food (0.3%), energy (0.9%), and medical care (0.6%) all contributed to household cost pressures.
Overall, financial markets responded cautiously to the report. Stock futures were mixed, and Treasury yields mostly declined, suggesting that investors remain uncertain about the inflation trajectory and monetary policy outlook in the months ahead.