{"id":350,"date":"2025-07-15T12:45:53","date_gmt":"2025-07-15T12:45:53","guid":{"rendered":"https:\/\/zoltrunakiver.com\/?p=350"},"modified":"2025-07-21T14:24:56","modified_gmt":"2025-07-21T14:24:56","slug":"the-tariff-driven-inflation-that-economists-feared-begins-to-emerge","status":"publish","type":"post","link":"https:\/\/zoltrunakiver.com\/index.php\/2025\/07\/15\/the-tariff-driven-inflation-that-economists-feared-begins-to-emerge\/","title":{"rendered":"The tariff-driven inflation that economists feared begins to emerge"},"content":{"rendered":"

By CHRISTOPHER RUGABER and JOSH BOAK, AP Writers<\/strong><\/p>\n

WASHINGTON (AP) \u2014 Inflation rose last month to its highest level since February as President Donald Trump\u2019s\u00a0sweeping tariffs<\/a>\u00a0push up the cost of everything from groceries and clothes to furniture and appliances.<\/p>\n

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.<\/p>\n

Worsening inflation poses a political challenge for Trump, who as a candidate promised to immediately lower costs, but instead has engaged in a whipsawed frenzy of tariffs that have jolted businesses and consumers. Trump insists that the U.S. effectively has no inflation as he has\u00a0attempted to pressure<\/a>\u00a0Federal Reserve Chair Jerome Powell into cutting short-term interest rates.<\/p>\n

Yet the new inflation numbers make it more likely that the central bank\u00a0will leave rates where they are<\/a>. Powell has said that he wants to gauge the economic impact of Trump\u2019s tariffs before reducing borrowing costs.<\/p>\n

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.<\/p>\n

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.<\/p>\n

\u201cYou are starting to see scattered bits of the tariff inflation regime filter in,\u201d said Eric Winograd, chief economist at asset management firm AllianceBernstein, who added that the cost of long-lasting goods rose last month, compared with a year ago, for the first time in about three years.<\/p>\n

Winograd also noted that housing costs, a big inflation driver since the pandemic, have continued to cool, actually holding down broader inflation. The cost of rent rose 3.8% in June compared with a year ago, the smallest yearly increase since late 2021.<\/p>\n

\u201cWere it not for the tariff uncertainty, the Fed would already be cutting rates,\u201d Winograd said. \u201cThe question is whether there is more to come, and the Fed clearly thinks there is,\u201d along with most economists.<\/p>\n

\"A
FILE \u2013 A shopper considers large-screen televisions on display in a Costco warehouse Oct. 3, 2024, in Timnath, Colo. (AP Photo\/David Zalubowski, File)<\/figcaption><\/figure>\n

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.<\/p>\n

A broader political battle over Trump\u2019s 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.<\/p>\n

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.<\/p>\n

\u201cConsumer Prices LOW,\u201d Trump posted on Truth Social. \u201cBring down the Fed Rate, NOW!!!\u201d<\/p>\n

For Democratic lawmakers, the inflation report confirmed their warnings over the past several months that Trump\u2019s tariffs could reignite inflation. They said Tuesday that it will only become more painful given the size of the tariff rates\u00a0in the letters<\/a>\u00a0that Trump posted over the past week.<\/p>\n

\u201cFor those saying we have not seen the impact of Trump\u2019s tariff wars, look at today\u2019s data. Americans continue to struggle with the costs of groceries and rent \u2014 and now prices of food and appliances are rising,\u201d said Sen. Elizabeth Warren, D-Mass.<\/p>\n

Many businesses built up a stockpile of goods this spring and were able to delay price hikes, while others likely waited to see if the duties would become permanent.<\/p>\n

More businesses now appear to be throwing in the towel and passing on costs to consumers, including Walmart, the world\u2019s largest retailer, which has said it raised prices in June. Automaker Mitsubishi said last month that it was lifting prices by an average of 2.1% in response to the duties, and Nike\u00a0has said<\/a>\u00a0it would implement \u201csurgical\u201d price hikes.<\/p>\n

Powell said last month that companies up and down the supply chain would seek to avoid paying tariffs, but that ultimately some combination of businesses and consumers would bear the cost.<\/p>\n