Inflation picks up again in June, rising at 2.7% annual rate

In recent months, critics of President Donald Trump’s tariff strategy have warned that an unwelcome uptick in inflation might be on the horizon. That moment may now have arrived.

According to the Labor Department, prices rose 2.7% over the 12-month period ending in June, marking the highest year-over-year inflation rate since February. The increase is seen as a potential sign that Trump’s import tariffs are finally beginning to push consumer prices higher—just as many economists had anticipated. Key contributors to the jump included rising costs for housing, food, and gasoline.

Economists have long expected that tariffs could reignite the inflation pressures that troubled consumers during the pandemic era.

The inflation rate had cooled to a four-year low of 2.3% in April, before edging up to 2.4% in May—a number that still came in below most forecasts. But with Trump’s new wave of tariffs starting to ripple through the supply chain, prices have begun to rise more noticeably.

Analysts from FactSet and The Wall Street Journal had predicted annual inflation would climb to 2.6% or 2.7% in June, attributing much of the expected increase to the growing impact of the tariff regime.

Since taking office, Trump has imposed a range of new tariffs, though some were later delayed or rolled back. Currently, a 10% levy applies to most imported goods.

Early signs of tariff-related price increases are already emerging in specific categories. Apparel prices rose 0.4% in June, while furniture prices increased by 1%. Video and audio equipment saw a 1.1% rise, and toy prices jumped 1.8%.

Most economists agree that these import taxes will eventually push inflation even higher, as businesses pass increased costs onto consumers. The June inflation data may be just the first clear indication of that effect.

“This marks the first inflation report where tariffs are materially surfacing in key spending categories — from home appliances and furniture to clothing and food,” said Daniel Hornung, senior fellow at MIT and former deputy director of the National Economic Council, in a written statement.
“But it’s unlikely to be the last. As businesses work through inventories stocked before the tariffs, prices are likely to rise even more sharply in the months ahead.”