Inflation in June rose to its highest level since February, as economists continue to monitor the impact of President Donald Trump’s ongoing tariffs on consumer prices. The Bureau of Labor Statistics showed the Consumer Price Index (CPI) rose 2.7% in June 2025.
Inflation on the rise
That’s up from an increase of 2.4% in May. The report also showed that, excluding volatile food and energy, core inflation increased 2.9% last month.
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The rise in inflation stemmed from a price increase across various categories. Gas prices went up 1% from May to June, while grocery prices increased by 0.3%.
“You are starting to see scattered bits of the tariff inflation regime filter in,” Eric Winograd, chief economist at asset management firm AllianceBernstein, told The Associated Press.
The AP also reported that toys, clothes, appliances, shoes and sporting goods all became more expensive last month and are heavily imported. A report from a Harvard University professor showed prices of goods from Canada also consistently rose as the trade war has escalated.
Most economic experts expect inflation to persist and prices to continue rising as the impact of the tariffs gradually trickles down to American consumers.
“If the tariffs are here to stay, they’re persistent, absolutely,” Ina Simonovska, economics professor at UC Davis, told Straight Arrow News. “I expect businesses to hold off as much as they can to not increase the prices. But at some point, when the tariffs kick in, they just can’t take such a big cut into their profit margins. So they’re going to have to pass it through the consumers eventually. But they will try to make it as gradual as they can.”
The president also announced a delay in implementing certain tariffs until August. It’s likely to help retailers prepare for the Christmas shopping season and keep costs down for consumers this holiday season. Pausing tariffs could also be part of why inflation numbers have not risen dramatically.
“I would have expected, actually, a bigger price increase,” Simonovska said.
She says businesses are also prepared for this.
“We know that about 60 % of businesses already were looking at changing their supply chains when the Trump administration was coming into power,” Simonovska said. “So these supply chains are being redrawn in real time.”
Any rise in inflation could create a political challenge for the president, who campaigned on lowering costs.
He responded to the report on social media, saying, “Fed should cut Rates by 3 Points. Very Low Inflation. One Trillion Dollars a year would be saved!!!”
Interest rate impacts
Despite rising inflation, the president has continually called for the Federal Reserve and Chairman Jerome Powell to cut short-term interest rates.
Powell and the Federal Reserve did not change rates in June 2025 and are likely to continue this approach with inflation on the rise. Powell has said he wants to see how the tariffs impact the economy before shrinking borrowing costs. Multiple reports indicate that September is the month when the Fed is expected to consider cutting rates, but only by a marginal amount.
Powell’s decision has drawn the ire of the president, who, earlier in July, called for Powell to resign immediately.
Economists seem more divided on what the Fed should do to help consumers and the economy.
“There are several papers written by prominent economists who study monetary macro models who actually are showing that we should be cutting rates rather than increasing rates because the effect of tariffs on prices is just a temporary effect,” Simonovska said.
“It’s not at all clear where the Fed is going to land on this. There’s going to be definitely a big divide among the different board members on this.”
Travel prices down
Some items and services did get cheaper in the past month, including new and used cars.
Hotel rooms and airfare also went down. Travel prices have continued to decline as fewer international tourists visit the United States.
So far this year, hotel room rates are down 3.7% and airfare is down 3.5% according to NerdWallet.
