U.S. Inflation Rises in June As First Tariff Effects Show

Consumer prices in the U.S. ticked up slightly in June as experts are saying the first signs of the Trump administration tariffs are beginning to show. While headline inflation rose to an annualized 2.7 percent - up from 2.4 percent in May -, the core index excluding more volatile food and energy prices stood at 2.9 percent, compared to 2.8 percent the month before. According to data published by the Bureau of Labor Statistics on Tuesday, consumer prices increased 0.3 percent in June on a monthly basis, which is a acceleration from an 0.1-percent increase in May. The figures were 0.2 percent and 0.1 percent for core inflation, respectively.

Aside from gasoline prices, which increased by 1 percent month-over-month after having fallen by 2.6 percent in May, appliances, household items and toys were among the categories that saw larger prices increases, as these items are typically imported. The shelter price index increased 0.2 percent in June, down from 0.3 percent in May. Due to its weight in the Consumer Price Index - shelter is by far the largest expenditure category in the virtual goods basket - slower housing inflation obscured at least some other price increases in June.

In a reaction to the latest CPI report, President Donald Trump once again repeated his call for more rate cuts in a social media post. According to the CME FedWatch Tool, markets are seeing no imminent rate cuts, however, pricing in just a 2.6-percent probability for such a move at the upcoming FOMC meeting in two weeks.