Updated July 28, 2025 at 8:19 AM PDT
Inflation picked up steam last month amid early signs that President Trump's tariffs are beginning to have an effect on the prices shoppers see in stores.
Consumer prices in June were up 2.7% from a year ago, according to a report Tuesday from the Labor Department. That's a larger annual increase than the month before.
Prices rose 0.3% between May and June, also a sharper increase than the previous month.
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Rising rents were the main driver of inflation in June. But the price of clothing, appliances and toys also jumped — which likely reflects the effects of import taxes. Clothing prices rose 0.4% while the price of appliances and toys jumped nearly 2%.
Energy and food costs were also higher in June, while the price of new and used cars and airline tickets was down.
Fed likely to hold rates — despite Trump's pressure
The president has imposed tariffs of at least 10% on nearly everything the U.S. imports, with higher taxes on goods from China. The government collected $27 billion from tariffs in June — a four-fold increase from the same month a year ago.
The average tariff on imported goods is now the highest it's been since the Great Depression. And Trump has threatened to impose even higher taxes on goods from many countries, beginning on Aug. 1.
Falling energy costs had helped to keep overall inflation in check in recent months. But gasoline prices rebounded in June. And electricity costs jumped by 1%, as hot summer weather kept air conditioners busy.
The uptick in inflation last month cements expectations that the Federal Reserve will hold interest rates steady when policymakers meet later this month, despite mounting pressure from the White House for lower rates. President Trump has frequently attacked Fed chairman Jerome Powell and his colleagues for not cutting rates more aggressively.
But investors still think a rate cut is likely in September.
Copyright 2025 NPR
