US inflation accelerates as tariffs start to bite

Inflation accelerated in June as US President Donald Trump's tariffs started to leave a bigger imprint on the economy, keeping the Federal Reserve on track to hold interest rates steady when policymakers next meet this month.

- COLBY SMITH

The consumer price index rose 2.7% from a year earlier, the swiftest pace since February, data released by the Bureau of Labor Statistics showed Tuesday. That is slightly higher than expected and up from an annual pace of 2.4% in May.

“Core” inflation, which strips out volatile food and energy prices and is seen as a reliable gauge for underlying price pressures, also shifted higher. Those prices were up 2.9% from the same time last year.

Over the course of the month, prices rose 0.3%, a notable pickup from a 0.1% increase in May. Core prices rose 0.2%.

The June data still reflects only the initial impact of Trump's global trade war. Prices of products most exposed to tariffs, such as household furnishings, jumped 1%, significantly higher than the 0.3% rise last month. Prices for appliances, specifically, rose 1.9%, up from 0.8%. The apparel index increased 0.4%, snapping multiple months of declining prices.

Petrol prices rose 1% in June, after falling 2.6% the previous month. Grocery prices also rose, ticking up 0.3% in June.

Economists expect price pressures to intensify over the coming months, especially if new tariffs the president has threatened against the European Union and a host of other countries in recent days are imposed Aug 1 as planned.

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