US consumer prices rise as expected in June, fueling inflation concerns
U.S. consumer prices increased by 0.3% in June, marking the largest monthly gain since January and signaling the start of a tariff-driven rise in inflation that is keeping the Federal Reserve cautious about cutting interest rates.
The Consumer Price Index (CPI) rose 2.7% year-over-year in June, up from 2.4% in May, according to the Labor Department's Bureau of Labor Statistics. Economists had predicted a 0.3% monthly increase and a 2.6% annual rise, News.Az reports, citing Reuters.
Excluding volatile food and energy prices, core CPI edged up 0.2% last month, with a 2.9% increase over the past year, slightly higher than the previous months’ 2.8%.
The inflation uptick comes amid recently announced higher tariffs set to take effect on August 1 for imports from countries including Mexico, Japan, Canada, Brazil, and the European Union. These tariffs are expected to push goods prices higher through the summer.
While prices for goods are rising strongly, moderate increases in services like airfares and hotel stays are tempering broad inflationary pressures, as softer demand keeps service price gains limited.
The Federal Reserve is expected to maintain its benchmark interest rate between 4.25% and 4.50% at its upcoming policy meeting later this month, with only a few officials signaling potential rate cuts in the near term.
Goldman Sachs forecasts continued core CPI monthly increases of 0.3% to 0.4% in the coming months, driven mainly by tariff-related price hikes in consumer electronics, autos, and apparel, while expecting limited impact on core services inflation.
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