Consumer prices in the U.S. rose in June, signaling the gradual impact of President Donald Trump’s tariffs on the broader economy. According to the Bureau of Labor Statistics, the Consumer Price Index (CPI) increased by 0.3% for the month, pushing the annual inflation rate to 2.7%—its highest level since February and above the Federal Reserve’s 2% target.
The monthly and annual increases were largely in line with expectations, highlighting a moderate but notable uptick in inflation as tariff policies start to make their presence felt in pricing structures.
Core Inflation Steady, Tariff Effects Mixed Across Sectors and Housing Costs Diverge
When excluding food and energy, core inflation increased 0.2% in June, bringing the year-over-year rate to 2.9%. Although slightly below the forecasted monthly gain of 0.3%, the steady rise suggests that underlying price pressures are persistent. The impact of tariffs was uneven across sectors.
Vehicle prices declined—with new cars dropping 0.3% and used vehicles down 0.7%—but tariff-sensitive categories such as apparel and household furnishings rose 0.4% and 1% respectively. These mixed results reflect the complex and sector-specific nature of tariff pass-through.

Shelter costs, which are a major component of the CPI, rose just 0.2% in June but still accounted for the largest share of the overall monthly increase. Year-over-year, shelter prices have grown by 3.8%. The index measuring what homeowners estimate they could earn from renting their homes went up 0.3%, while lodging away from home dropped significantly by 2.9%. These contrasting trends underscore varying pressures within the housing sector, driven by both demand and short-term market shifts.
Trump Renews Fed Pressure as Inflation Rises, Markets Await September Rate Cut
Despite the inflation uptick, economist Dan North of Allianz Trade noted the difficulty in directly attributing price increases to tariffs, though he expects eventual consumer impact. President Trump seized the report as an opportunity to renew his call for interest rate cuts, urging the Federal Reserve to lower rates by as much as three percentage points.
He emphasized that doing so could save the country a trillion dollars annually. However, the central bank, under Chair Jerome Powell, has held its ground, arguing that the economy remains strong enough to justify a wait-and-see approach.
Market reaction to the inflation report was muted, with stock futures mixed and Treasury yields mostly lower. Meanwhile, inflation-adjusted hourly earnings fell by 0.1% in June, although they remained up 1% on an annual basis. Food and energy prices showed monthly gains of 0.3% and 0.9%, respectively, while medical care and transportation services also edged higher.
As the Federal Reserve gears up for its July meeting, markets anticipate no immediate rate change but expect a quarter-point cut in September, as policymakers assess the long-term effects of tariffs and overall inflation trends.