The Consumer Price Index (CPI) for June increased by 2.7% on an annual basis, signaling that inflation across the U.S. is gradually rising after declines earlier this year.
Economists surveyed by FactSet had forecasted a 2.7% rise, up from May’s 2.4%. June’s CPI reading marks the highest since February, when it rose 2.8% year-over-year. On a monthly basis, CPI increased by 0.3%, the largest monthly gain since January and in line with forecasts.
The CPI tracks price changes for a typical basket of goods and services purchased by consumers. While inflation has eased from its 2022 peak, many household expenses remain elevated.
So-called core inflation—which excludes volatile food and energy prices—rose 2.9% year-over-year, slightly below the 3% forecast by economists polled by FactSet.
Food prices rose 3% annually in June, outpacing overall inflation. Notable increases include eggs (up 27.3%), roasted coffee (up over 12.7%), and ground beef (up 10.3%).
Energy was a significant driver, rising 0.9% month-over-month following a 1% drop in May. Other price increases were seen in household furnishings and operations, medical care, recreation, apparel, and personal care, according to Bureau of Labor Statistics data.
June’s data suggests tariffs may be starting to push prices up in certain categories. Everyday products, including produce and apparel, could be affected by new tariffs on imports. Fed Chair Jerome Powell recently predicted tariffs could raise prices in the latter half of the year.
President Trump announced new tariffs on over 20 countries, effective August 1, 2025, extending the end of a 90-day pause on reciprocal tariffs earlier this month.
Adam Crisafulli, head of Vital Knowledge, noted in an email that some tariff-exposed categories—such as apparel, home furnishings, appliances, footwear, and toys—showed upward price pressure, while others like vehicles did not.
EY-Parthenon Chief Economist Gregory Daco estimated in an email that “roughly one third of the monthly CPI advance in June can be attributed to a tariff-induced impulse.”
Previous muted CPI reports suggest companies have absorbed tariff costs to shield consumers, but Daco warned that “strategies used by companies to avoid passing on cost increases to consumers are not eternal.”
Despite these inflationary signals, analysts say inflation remains contained overall. Kay Haigh, global co-head of fixed income and liquidity solutions at Goldman Sachs Asset Management, said: “While today’s CPI release showed some early signs of tariff impact, on the whole underlying inflation remained muted. Price pressures, however, are expected to strengthen over the summer and the July and August CPI reports will be important hurdles to clear.”
Given today’s data, a Federal Reserve rate cut in July is unlikely. The CME Group’s FedWatch tool shows a 97.4% chance the Fed will maintain the federal funds rate between 4.25% and 4.5% at its upcoming meeting.
“Today’s inflation report all but dashes any remaining hopes that the Fed may cut interest rates at its meeting later this month,” said eToro U.S. investment analyst Bret Kenwell. “However, if subsequent inflation readings reiterate the rise in inflation, it could jeopardize future rate cuts as well.”
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