Groceries are seen at a Walmart supermarket in Houston, Texas, on May 15, 2025. <\/p>\n
Ronaldo Schemidt | AFP | Getty Images<\/p>\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’s\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 Tariffs’ inflationary effect<\/p>\n President\u00a0Donald Trump<\/a>‘s 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 “secondary\u00a0tariffs<\/a>” on Russia’s trade partners, “at about 100%.”<\/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 “While 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,” Sarah House,\u00a0senior economist at Wells Fargo, said in a July 8 research report<\/a>. “We expect core goods prices to pick up further in the second half of the year as a result.”<\/p>\n “As we are in this higher tariff environment longer, you will begin to see more of these effects,” House told CNBC.<\/p>\n More from Personal Finance: 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 “Inflation is going kick into a much higher gear in coming months,” said Mark Zandi, chief economist at Moody’s. “We are on the leading edge of that now, but it will become clearly evident in the months ahead.”<\/p>\n “Higher tariffs are also adding to businesses’ production costs and that will flow through to consumers more indirectly,” Zandi said.<\/p>\n ‘This won’t be like 2022’<\/p>\n Still, longer-term inflation expectations are somewhat muted. “Despite accelerating inflation, this won’t be like 2022,” said Stephen Kates, Bankrate’s 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
Trump’s ‘big beautiful bill’ slashes CFPB funding<\/a>
78% say Trump’s tariffs will make it harder to deal with debt<\/a>
Tax changes under Trump’s ‘big beautiful bill’ \u2014 in one chart<\/a><\/p>\n