Prices in the U.S. just took their biggest leap in five months — and President Trump’s tariff spree is getting the blame.
Consumer prices rose 0.3% in June, a sharp jump from 0.1% in May, according to new data from the Labor Department. It’s the strongest monthly increase since January, and a clear sign that the White House’s escalating trade war is hitting home.
Gas prices bounced back, food costs climbed, and everyday items like furniture, clothing, and coffee are all getting more expensive. Economists say this is just the beginning.
“While today’s CPI release showed some early signs of tariff impact, on the whole underlying inflation remained muted,” said Kay Haigh, global co-head of fixed income and liquidity solutions at Goldman Sachs Asset Management. “Price pressures, however, are expected to strengthen over the summer and the July and August CPI reports will be important hurdles to clear. For the time being the Fed remains in wait-and-see mode.”
The 2.7% year-over-year rise in the Consumer Price Index is outpacing May’s 2.4% climb — and faster than what economists had forecast.
Behind the spike: Trump’s latest round of tariffs. After hitting China, he’s expanded import duties to cover goods from Mexico, Japan, Canada, Brazil, and the European Union, with more hikes set to take effect August 1.
At first, businesses managed to avoid price hikes by using pre-tariff inventory. But that cushion is gone. Now, higher import costs are hitting store shelves.
Furniture prices jumped 1.0%. Appliances surged 1.9%. Sporting goods were up 1.4%, toys rose 1.8%, and apparel rebounded 0.4%.
At the grocery store, coffee jumped 2.2%, beef rose 2.0%, fruits and vegetables climbed 0.9%, and nonalcoholic beverages went up 1.4%. Food eaten at home and away from home both rose 0.3% and 0.4%, respectively. The only break? Egg prices dropped 7.4% as an earlier avian flu outbreak eased.
Not everything is going up. Used car prices fell 0.7%, and new vehicle prices dipped 0.3%. Hotel rooms were down 3.6%, and airline fares slid 0.1%. But those savings aren’t enough to offset rising costs elsewhere.
The Federal Reserve is now stuck between rising prices and political pressure. Trump has been publicly demanding lower interest rates, but the Fed isn’t budging. Minutes from the central bank’s June meeting show only “a couple” of officials were open to rate cuts this month.
The Fed’s inflation target is 2%, but the numbers keep climbing. Core CPI — which excludes food and energy — rose 0.2% in June, and 2.9% over the past year, up from 2.8% the previous three months.
Goldman Sachs expects even more inflation in the months ahead. The bank forecasts monthly core CPI increases between 0.3% and 0.4% as tariffs drive up costs for electronics, cars, and clothing.
Bottom line: The price spikes are no accident. Trump’s tariff policy is hitting American consumers, and the pain is spreading.
