CPI rose in June to 2.7% annual rate, new data show

The Consumer Price Index in June rose 2.7% on an annual basis, a sign inflation around the U.S. is creeping up after declining earlier this year.

The CPI was forecast to rise 2.7% last month, higher than last month's rate of 2.4%, according to economists polled by financial data firm FactSet. June's reading is the highest since February, when the CPI rose 2.8% on an annual basis.

On a month-over-month basis, the CPI rose 0.3%, which is the largest increase since January and in line with economists' forecasts.

The CPI, a basket of goods and services typically bought by consumers, tracks the change in those prices over time.

So-called core inflation, a measure of CPI that excludes food and energy prices (which are more volatile), rose by 2.9% over the past 12 months, according to the Bureau of Labor Statistics. That's slightly below the 3% predicted by economists polled by FactSet.

Food prices rose 3% on an annual basis last month, higher than the overall inflation rate. Items that have seen big cost increases since last June include eggs, which are up 27.3%, roasted coffee, which is up over 12.7%, and ground beef, which is up 10.3%.

Meanwhile, energy was a large source of inflation, with energy prices rising 0.9% on a month-over-month basis. That follows a 1% drop in May.

Other categories that increased in price since last month include household furnishings and operations, medical care, recreation, apparel and personal care, Bureau of Labor Statistics data shows.

June's reading indicates that tariffs might gradually be starting to drive up prices in certain categories. Everyday items, from produce to apparel, could be susceptible to new levies if they are imported from abroad. Fed Chair Jerome Powell last month predicted that tariffs could start to push up prices in the second half of the year.

President Trump recently announced he would issue a flurry of new tariffs on over 20 countries, which he said will go into effect Aug. 1, 2025, extending the deadline of a 90-day pause on reciprocal tariffs that came to an end earlier this month.

In response to the CPI data, Adam Crisafulli, head of Vital Knowledge, said in an email note that certain categories exposed to tariffs (apparel, home furnishings, appliances, footwear and toys, for example) saw some upward pressure, while others, such as like vehicles, did not.

EY-Parthenon Chief Economist Gregory Daco said in an email note that he estimates "that roughly one third of the monthly CPI advance in June can be attributed to a tariff-induced impulse."

The muted CPI data from previous months indicates that companies have taken steps to offset the costs of tariffs, largely shielding consumers from price shocks. However, that could change. "Strategies used by companies to avoid passing on cost increases to consumers are not eternal," Daco noted.

Despite all this, analysts say inflation still remains in check. "While today's CPI release showed some early signs of tariff impact, on the whole underlying inflation remained muted," said Kay Haigh, global co-head of fixed income and liquidity solutions in Goldman Sachs Asset Management. "Price pressures, however, are expected to strengthen over the summer and the July and August CPI reports will be important hurdles to clear."

Analysts say that today's inflation data makes the case for a Fed rate cut in July even more unlikely. The CME Group's FedWatch tool shows a likelihood of 97.4% that the Fed will keep the federal funds rate at its current range of 4.25% to 4.5% when they meet later this month.

"Today's inflation report all but dashes any remaining hopes that the Fed may cut interest rates at its meeting later this month," said eToro U.S. investment analyst Bret Kenwell in an email. "However, if subsequent inflation readings reiterate the rise in inflation, it could jeopardize future rate cuts as well."

• Tariffs
• Consumer Price Index
• Inflation