U.S. inflation accelerated in June under the weight of tariff-related pressures

U.S. consumer prices rose more sharply in June, potentially signaling the start of a long-anticipated increase in inflation driven by tariffs. This shift has made the Federal Reserve more cautious about the prospect of resuming interest rate cuts.

The Consumer Price Index (CPI) climbed 0.3% in June, in line with forecasts and representing the largest monthly increase since January. This followed a modest 0.1% gain in May. On an annual basis, CPI rose 2.7%, up from 2.4% the previous month, slightly exceeding expectations.

Core CPI, which excludes food and energy, increased 0.2% in June after a 0.1% rise in May. Over the past 12 months, core inflation reached 2.9%, accelerating from 2.8%, a level that had held steady for three consecutive months.

From February through May, inflation remained subdued, prompting President Donald Trump to call on the Fed to lower interest rates. Economists noted that the delayed impact of tariffs was due in part to businesses continuing to sell pre-tariff inventory.

With new and higher tariffs set to take effect on August 1—impacting imports from countries such as Mexico, Japan, Canada, Brazil, and the European Union—the overall tariff burden is expected to rise, likely contributing to further price increases over the summer.

Economists project stronger inflation in goods prices in the months ahead, though this may be tempered by softer price trends in the services sector. Areas like airfares and hotel rates have shown limited increases, reflecting weak consumer demand.

The Federal Reserve, which aims for 2% inflation, tracks several inflation indicators and is widely expected to hold its benchmark interest rate at 4.25%–4.50% at its upcoming policy meeting later this month.

Minutes from the Fed’s June 17–18 meeting, released last week, revealed that only a few officials saw room for a rate cut as early as the July 29–30 meeting, indicating continued caution amid mixed inflation signals.