Christopher Lugerber and Josh Balk, AP author
WASHINGTON (AP) – Inflation rose to its highest level last month since February as President Donald Trump’s drastic tariffs pushed up everything from food and clothing to furniture and appliances.
Consumer prices rose 2.7% in June last year, the Labor Bureau said Tuesday, up from a 2.4% annual increase in May. Monthly, prices rose 0.3% from May to June after only 0.1% in the previous month.
Aggravating inflation presents a political challenge for Trump, who has promised to cut costs as a candidate, but instead engages in the tariff frenzy that has rocked businesses and consumers. Trump has insisted that the US is virtually free of inflation as he tried to pressure Federal Reserve Chairman Jerome Powell to cut short-term interest rates.
However, the new inflation numbers make central banks more likely to leave interest rates. Powell said he wants to measure the economic impact of Trump’s tariffs before cutting borrowing costs.
Excluding volatile foods and energy, core inflation rose 2.9% in June from the previous year, up from 2.8% in May. It increased by 0.2% each month from May to June. Economists usually look closely at core prices to provide a better sense of where inflation is heading.
Increases inflation were driven by a higher price range. Gasoline costs rose 1% between May and June, while grocery prices rose 0.3%. Appliance prices have jumped for the third consecutive month. Toys, clothing, audio equipment, shoes and sports goods are all expensive and everything is imported.
“We’re committed to providing a great opportunity to help you,” said Eric Winograd, chief economist at asset management company Alliance Bernstein.
Winograd also said housing costs, the biggest inflation driver since the pandemic, continue to cool down and actually curtail wider inflation. Rent costs rose 3.8% in June compared to a year ago, the lowest annual increase since the second half of 2021.
“If there’s no tariff uncertainty, the Fed will already cut,” Winograd said. “The question is whether or not we need to come more, and the Fed thinks there is clearly,” said most economists.
Last month, some items were cheaper, including new and used cars, hotel rooms, airfares and more. Travel prices have generally fallen in recent months due to the lack of international tourists visiting the US
A broader political battle has emerged over Trump’s tariffs. This is a battle that will ultimately be determined by how the American people feel about their cost of living, and whether the president is doing good in his 2024 promise to help the middle class in 2024.
The White House has pushed back allegations that the report showed a negative impact from the tariffs as new cars cost decreased despite a 25% tariff on cars and a 50% tariff on steel and aluminum. The administration also pointed out that despite the June uptick in apparel prices, clothing prices are cheaper than they were three months ago.
“Consumer prices are low,” Trump posted to The Truth Society. “Low the Fed rate now!!!”
For democratic lawmakers, the inflation report has confirmed warnings over the past few months that Trump’s tariffs could rekindle inflation. They said Tuesday it would only be even more painful given the size of the tariff rates for letters Trump has posted over the past week.
“For those who say they’ve never seen the impact of Trump’s tariff war, look at today’s data. Americans continue to struggle with the costs of food and rent, and now the prices of food and appliances are rising,” said D-Mass Sen. Elizabeth Warren.
Many companies were able to build stockpiles of goods this spring to slow price increases, while others were waiting to see if their duties would be permanent.
Now more businesses are throwing towels and apparently giving the costs to consumers, including Walmart, the world’s largest retailer, and say they raised prices in June. Mitsubishi Motors said last month that it was increasing its price average of 2.1% depending on its duties, and Nike said it would implement a “surgical” price hike.
Powell said last month that companies in and out of the supply chain will try to avoid paying tariffs, but ultimately the combination of businesses and consumers will bear the cost.
“We have manufacturers, exporters, importers, retailers, consumers, and each one is trying to ensure that they don’t pay for the tariffs,” the Fed chair said. “But together, they all pay together. Or maybe one party pays everything. But the process is very difficult to predict and we haven’t experienced this situation.”
Trump imposes a 10% sweep obligation on all imports and 30% on goods from China. Last week, the president threatened to strike the European Union with a new 30% tariff starting on August 1.
He also threatens to slap 50% of the duties in Brazil, which boosts the costs of orange juice and coffee. Orange prices jumped 3.5% between May and June, 3.4% higher than a year ago, the government said Tuesday.
Overall, grocery prices rose 0.3% last month, up 2.4% from the previous year. It’s a much smaller increase than after the pandemic, but when inflation surges, it’s slightly greater than it was before the pre-pandemic pace. The Trump administration also has a 17% obligation on tomatoes in Mexico.
Families are cutting their food spending as prices rise. Cassidy Grom, 29, is trying to eat less and use salads and bones in soups, trying to eat less and stretch the rotisserie chicken from the grocery store as much as possible.
“It feels like a miracle to be able to leave the grocery store without spending $100,” said the Edison, New Jersey resident. “We’re trying to save our homes. We’re trying to save for our families, so we really keep the prices in mind.”
Accelerated inflation could provide a rest for Powell, who has been exposed to a dead fire from the White House at interest rates.
The Federal Reserve Chairman said the job could push prices up and slow the economy. It says this is a tricky central bank combination as higher costs usually lead to a rise in the Fed.
Original issue: July 15th, 2025, 8:45am EDT
