\n<\/p>\n
Customers line up at the check out booth on April 18, 2025 at a Costco branch in Niantic, Connecticut.<\/p>\n
Robert Nickelsberg | Getty Images<\/p>\n<\/div>\n<\/div>\n<\/div>\n
The annual inflation<\/a> rate ticked higher<\/a> in June, in line with expectations, as lower prices at the gasoline pump somewhat offset higher prices at the grocery store.<\/p>\n Economists said they expect the full impact from the Trump administration\u2019s\u00a0tariff agenda<\/a>\u00a0to raise consumer prices more in the months ahead \u2014 but they said trade policies have already started to noticeably affect inflation.<\/p>\n The\u00a0consumer price index<\/a>, a key inflation barometer,\u00a0rose 2.7%<\/a>\u00a0in the 12 months through June, up from 2.4% in May, the Bureau of Labor Statistics said Tuesday.<\/p>\n<\/div>\n President\u00a0Donald Trump<\/a>\u2018s tariffs continue to work their way through the U.S. economy, even as the risk of further escalation grows.<\/p>\n Trump announced Saturday that the U.S. will impose\u00a030% tariffs<\/a>\u00a0on the European Union and Mexico starting Aug. 1. On Monday, Trump threatened to impose \u201csecondary\u00a0tariffs<\/a>\u201d on Russia\u2019s trade partners, \u201cat about 100%.\u201d<\/p>\n Tariffs are a tax on imports from foreign nations, paid by U.S. companies that import the good or service. Businesses negatively affected are expected to pass on at least some of that additional cost to consumers through higher prices<\/a>.<\/p>\n \u201cWhile inventory front-running has\u00a0mitigated the need to raise\u00a0goods prices, it will become increasingly difficult for businesses to absorb higher import duties as pre-tariff stockpiles dwindle,\u201d Sarah House,\u00a0senior economist at Wells Fargo, said in a July 8 research report<\/a>. \u201cWe expect core goods prices to pick up further in the second half of the year as a result.\u201d<\/p>\n \u201cAs we are in this higher tariff environment longer, you will begin to see more of these effects,\u201d House told CNBC.<\/p>\n More from Personal Finance:<\/strong> White House<\/a>\u00a0economic advisor\u00a0Kevin Hassett<\/a>\u00a0has argued that new\u00a0tariff<\/a>\u00a0policies have not been as\u00a0inflationary as expected\u00a0because consumers are buying more\u00a0American-made<\/a> goods.<\/p>\n But other economists also predict the full impact from tariffs on pricing will likely show up in the second half of the year.\u00a0<\/p>\n \u201cInflation is going kick into a much higher gear in coming months,\u201d said Mark Zandi, chief economist at Moody\u2019s. \u201cWe are on the leading edge of that now, but it will become clearly evident in the months ahead.\u201d<\/p>\n \u201cHigher tariffs are also adding to businesses\u2019 production costs and that will flow through to consumers more indirectly,\u201d Zandi said.<\/p>\n<\/div>\n Still, longer-term inflation expectations are somewhat muted. \u201cDespite accelerating inflation, this won\u2019t be like 2022,\u201d said Stephen Kates, Bankrate\u2019s financial analyst. He pointed to the June report three years ago, when inflation spiked to 9.1%<\/a>, marking the largest year-over-year jump\u00a0since 1981.<\/p>\n In many ways, shoppers are still struggling with that sticker shock<\/a>, Kates said. \u201cPeople have long memories for that,\u201d he said.<\/p>\n \u201cI used to pay $2 for a can of peas and now it\u2019s $3.50,\u201d he said as an example. \u201cThat is a huge change, and you are constantly reminded of it every week.\u201d<\/p>\n<\/div>\n There were some mixed signals in this month\u2019s report.<\/p>\n Grocery prices rose 0.3% over the month and were 2.4% higher year over year. The meats, poultry, fish and eggs index jumped 5.6% over the last 12 months. However, while eggs are still almost 30% higher than they were a year ago, they\u2019re down 7% from last month.<\/p>\n Inflation for housing, the largest CPI component, increased just 0.2% for the month but was 3.8% higher compared to a year ago. That was the largest contributor to the overall CPI gain, the BLS said.\u00a0<\/p>\n<\/div>\n Gasoline prices increased by 0.1% from May to June, on a seasonally adjusted basis, but are down 8.3% for the year, according to the CPI data.<\/p>\n Meanwhile, prices for used cars and trucks declined in June, with prices on new vehicles falling 0.3% and used car and trucks down 0.7%. Airline fares were also slightly lower, by 0.1%.<\/p>\n \u201cThere are a lot of cross currents, but the net is a general tilt higher, and that\u2019s a precursor to stronger inflation numbers in the months ahead,\u201d Zandi said.<\/p>\n Core inflation \u2014 which strips out energy and food prices, which can be volatile categories \u2014 was up 2.9% in June.<\/p>\n Subscribe to CNBC on YouTube.<\/strong><\/em><\/a><\/p>\n<\/div>\n<\/div>\n\nTariffs\u2019 inflationary effect<\/h2>\n
Trump\u2019s \u2018big beautiful bill\u2019 slashes CFPB funding<\/a>
78% say Trump\u2019s tariffs will make it harder to deal with debt<\/a>
Tax changes under Trump\u2019s \u2018big beautiful bill\u2019 \u2014 in one chart<\/a><\/p>\n\u2018This won\u2019t be like 2022\u2019<\/h2>\n
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