Key Takeaways
- Inflation ticked up in June as President Donald Trump’s tariffs started to push up consumer prices.
- Consumers saw the impact of the import taxes at the grocery store and when buying clothing, although car prices fell.
- The uptick in inflation dashed hopes among investors that the Federal Reserve will cut it influential interest rate this summer.
President Donald Trumps far-reaching tariffs are starting to push up sticker prices.
Costs as measured by the Consumer Price Index rose 2.7% over the year in June, up from a 2.4% annual increase in May, the Bureau of Labor Statistics said Tuesday. The increase was in line with the expectations of forecasters, according to a survey of economists by Dow Jones Newswires and The Wall Street Journal. Core inflation, which excludes volatile prices for food and gas, rose 2.9% over the year, up from 2.8% in May, slightly less than the median forecast of a 3% increase.
The overall inflation figure was pushed up by a jump in gas prices, which temporarily surged in June because of fighting in the Middle East. Groceries, electricity, clothing, and medical care all got more expensive, while new and used car prices fell, helping to keep core inflation subdued. However, the relief in car prices may only be temporary, given that Trumps 25% tariff on foreign cars has been in effect for months.
“Tariffs are starting to bite American consumers, Heather Long, chief economist at Navy Federal Credit Union, wrote in a commentary. People are starting to notice the price increases at the grocery store in coffee and fruit and in appliances and household items. It’s only a matter of time before more price hikes take effect, especially for cars and trucks.
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