U.S. inflation rises as tariffs raise prices

Last month, President Donald Trump’s tariffs were reached, and U.S. inflation rose, and prices of goods ranging from clothing to coffee rose.

The Labor Department said consumers’ prices rose 2.7% in the year to June, up from 2.4% last month, with prices rising at the fastest pace since February.

Higher energy and housing costs (such as rents) are the main drivers of the increase.

But the data also suggests that as some companies start to include Trump’s new tax on imports into costs, consumers are starting to feel the impact of tariffs.

From May to June, coffee prices rose 2.2%, while citrus fruit prices rose 2.3%. Toy prices rose 1.8%, equipment prices rose 1.9%, while clothing prices rose 0.4%, the industry that rose for the first time in months.

But the overall rise still includes, and falls primarily within expectations, offset by the price drop in new cars, air tickets and hotel bookings.

“Some tricks revolve around certain categories of tariffs, especially household appliances and furniture,” said Olu Sonola, head of U.S. economic research at Fitch Ratings.

“This trick stream is likely to gain momentum in the coming months.”

This year, the average effective tariff rate in the United States surged, with Trump imposing a 10% tax on most goods entering the country, hitting key items such as steel and cars with higher taxes.

Although he suspended some of the more aggressive plans, he has resumed tariff threats in recent weeks, warning of fulfilling duties on goods in most countries from August 1. Ongoing talks raised hopes that the deal would avoid penalizing tariffs.

Trump said on Tuesday that he had reached a “big deal” with Indonesia, but provided no details. So far, his tariff talks with other countries have concluded that the level of commodity tariffs in these countries is much higher than the United States at the beginning of the year.

The president said taxes would protect U.S. businesses from foreign competition, promote domestic manufacturing and jobs, and bring revenue to the government.

The White House rejected the forecast that the measures would lead to higher prices for Americans, believing that companies and foreign exporters would absorb costs.

This view contradicts most economic forecasters, who believe that the U.S. economy has been blocked so far because companies have stockpiled many commodities in advance.

Although Trump lowered interest rates, the U.S. central bank refused to make any changes, saying it would take more time to understand the impact of the measures.

Analysts said Tuesday they expect no cuts at the Fed’s meeting this month, given the new figures.