WASHINGTON (AP) — Inflation rose last month to its highest level since February. as
Consumer prices rose 2.7% in June from a year earlier, the Labor Department said Tuesday, up from an annual increase of 2.4% in May. On a monthly basis, prices climbed 0.3% from May to June, after rising just 0.1% the previous month.
While an increase, the inflation data was only slightly higher than what economists were expecting.
President Trump is pleased with the latest inflation numbers. Trump believes that the U.S. effectively has no inflation and is pressuring Federal Reserve Chair Jerome Powell to cut short-term interest rates.
Yet the new inflation numbers make it more likely that the central bank will leave rates where they are. Powell has said that he wants to gauge the economic impact of Trump’s tariffs before reducing borrowing costs.
Excluding volatile food and energy, core inflation increased 2.9% in June from a year earlier, up from 2.8% in May. On a monthly basis, it picked up 0.2% from May to June. Economists closely watch core prices because they typically provide a better sense of where inflation is headed.
The uptick in inflation was driven by a range of higher prices. The cost of gasoline rose 1% just from May to June, while grocery prices increased 0.3%. Appliance prices jumped for the third straight month. Toys, clothes, audio equipment, shoes, and sporting goods all got more expensive, and are all heavily imported.
Some items got cheaper last month, including new and used cars, hotel rooms, and airfares. Travel prices have generally declined in recent months as fewer international tourists visit the U.S.
A broader political battle over Trump’s tariffs is emerging, a fight that will ultimately be determined by how the U.S. public feels about their cost of living and whether the president is making good on his 2024 promise to help the middle class.
The White House pushed back on claims that the report showed a negative impact from tariffs, since the cost of new cars fell despite the 25% tariffs on autos and 50% tariffs on steel and aluminum. The administration also noted that despite the June bump in apparel prices, clothing prices are still cheaper than three months ago.
“Consumer Prices LOW,” Trump posted on Truth Social. “Bring down the Fed Rate, NOW!!!”
Accelerated inflation could provide a respite for Powell, who has come under withering fire from the White House over interest rates.
The Fed chair has said that the duties could both push up prices and slow the economy, a tricky combination for the central bank since higher costs would typically lead the Fed to hike rates while a weaker economy often spurs it to reduce them.
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