Customers shop at a Walmart store in Los Angeles County, California, the United States, May 20, 2025. Photo: Xinhua

Customers shop at a Walmart store in Los Angeles County, California, the United States, May 20, 2025. Photo: Xinhua

US Federal Reserve Board Chair Jerome Powell told central-bankers and economists on Friday that the impact of US tariffs on consumer prices “is now clearly visible” and will continue “over coming months.” 

“We expect those effects to accumulate over coming months, with high uncertainty about timing and amounts,” Powell said in a speech at the Fed’s annual symposium in Jackson Hole on Friday. “A reasonable base case is that the effects will be relatively short lived-a one-time shift in the price level-yet ‘one-time’ does not mean all at once,” he said, according to a document released on the US Federal Reserve’s website on Friday.

However, Zhou Mi, a senior research fellow at the Chinese Academy of International Trade and Economic Cooperation warned that the full impact on consumer prices is still rippling through global supply chains. If US tariffs continue to escalate or supply chains are further disrupted, the so-called “one-time” impact could compound, leading to a sustained erosion of real purchasing power. The US Federal Reserve will then be forced to make a difficult choice between “maintaining growth” and “controlling inflation,” Zhou told the Global Times on Saturday. 

Zhou added that the ultimate impact depends on whether the US continues to escalate tariffs and how other countries restructure supply chains and adjust policy to offset risks.

In his remarks, Powell underscored that tariffs are lifting inflation and could push it higher in the coming months. He noted that tariff rates “continue to evolve,” a process that could “prolong the adjustment process.” For monetary policy makers, the key question, he said, is whether the upward pressure from tariffs could create a lasting inflation dynamic, something that must be carefully assessed and managed. 

Data released earlier this month show the tariff impact is already surfacing in the price indices. “Turning to inflation, higher tariffs have begun to push up prices in some categories of goods,” according to Powell.

Estimates based on the latest available data indicate that total personal-consumption expenditures (PCE) prices rose 2.6 percent over the 12 months ending in July. Excluding the volatile food and energy categories, core PCE prices rose 2.9 percent, above their level a year ago. Within core, goods prices increased 1.1 percent over the past 12 months, a notable reversing the modest decline seen over the course of 2024, according to minutes from the most recent Fed meeting.

Meanwhile, an AP reoprt indicated that tariffs are starting to lift the prices of heavily imported goods such as furniture, toys, and shoes.

Zhou said that unlike the more familiar Consumer Price Index, the PCE index gauge tracks how price movements in the goods market flow directly into to household spending. This, he argued, makes clear that tariffs-now embedded as a permanent layer of supply-chain cost-are already weighing on overall consumption.

“These additional costs will inevitably manifest themselves in some form. Even if some tariffs are imposed on raw materials and intermediate products, they will ultimately be reflected in end consumer goods,” Zhou said.

What’s more, to offset rising costs, firms may slow wage growth and postpone investment, further weakening consumer demand, Zhou added.

The expert also warned that this impact extends beyond US consumers, creating broader uncertainty for the global economy, given that the US economic policy has always been to shift risks onto other countries.