Rising Inflation: How Trump’s Tariffs Impacted US Prices Last Month

The Federal Reserve reported a rise in its favored measure of inflation last month, signaling that President Trump’s tariffs are affecting prices.

In June, prices jumped by 2.6% compared to the previous year, up from 2.4% in May. When excluding food and energy, the increase was 2.8%, unchanged from May but higher than expected. This trend is above the Fed’s target of 2%.

This inflation rise makes the Fed cautious about lowering interest rates. On Wednesday, it kept the key rate steady at 4.3%. Fed Chair Jerome Powell noted that it might take time to figure out whether the recent price hikes will be temporary or more permanent.

Month-to-month comparisons show that prices increased by 0.3% from May to June. Gas prices went up by 0.9%, while grocery costs rose by 0.3%. Many imported goods saw significant price hikes—furniture prices rose by 1.3%, appliances by 1.9%, and computers by 1.4%.

On the flip side, some service costs decreased. Airfare dropped by 0.7%, and hotel prices fell sharply by 3.6%.

Consumer spending also saw a modest boost of 0.3% between May and June. However, after adjusting for inflation, this is just a 0.1% increase. Americans are spending carefully, reflecting a cautious attitude that’s been noticeable throughout the year.

In the second quarter, the economy grew at a solid 3% rate, but this figure hides some concerns. Consumer spending grew by only 1.4%, following a mere 0.5% increase in early 2023. A significant drop in imports during April to June played a major role in boosting the GDP numbers.

Interestingly, the consumer price index, which is the government’s main measure of inflation, also rose in June. Many of the goods that saw price increases included heavily imported products like furniture and appliances.

With inflation on the rise, experts suggest we can expect ongoing discussions about the Fed’s monetary policy. As individuals and businesses feel the squeeze from rising prices, social media platforms buzz with reactions. Many express worries about how long this trend will last and its impact on everyday life. Understanding these dynamics can provide valuable insights into the economy’s future.

For further reading on inflation trends, you can check out the U.S. Bureau of Labor Statistics.

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