Inflation heats up in June amid fears of Trump trade war effects
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Consumer prices rose at a quicker rate in June, breaking a monthslong streak of cooling inflation, the Labor Department said on Tuesday.
Why it matters: The data will likely concern economic policymakers, who fear that President Trump's tariffs will raise prices and reignite rising prices across America.
- It comes as Trump threatens harsher tariff rates on top U.S. trading partners as soon as Aug. 1.
By the numbers: The Consumer Price Index rose 0.3% in June, while the core measure — which strips out energy and food prices — rose 0.2%. Both gauges rose by 0.1% in May.
- Over the last 12 months, CPI increased 2.7%, compared to the 2.4% increase in May.
- Core CPI increased 2.9% in the year ending in June, ticking up from the 2.8% increase the prior month.
Details: A sharp pickup in gasoline prices pushed up overall CPI last month, with a 1% gain after four months of declining costs. The administration has repeatedly argued that even if tariffs pushed up prices for some goods, it would be more than offset by consumer savings from lower gas prices.
- The report also showed higher prices in key goods categories that might be among the first to show effects from higher tariffs, including the apparel index, which rose by 0.4% — the first increase since March.
- Still, auto prices continued to fall: An index for new vehicles declined by 0.3% after a similar decline in May. Used cars and trucks fell by 0.7% after dropping 0.5% the previous month.
The big picture: Economists anticipate inflationary consequences from tariffs will show up in reports down the line, as businesses run down stockpiles of goods brought in before the biggest tariffs took effect.
- The White House has stepped up pressure on Federal Reserve chair Jerome Powell to lower interest rates. The central bank has kept rates on hold to wait and see how tariff effects are rippling across the economy.
Editor's note: This story has been updated with details from the report.
