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Tariffs

Inflation Rises to Highest Level Since February, Trump's Tariffs Take Blame

Strategic Insights

— 2 min read

President Donald Trump's tariffs have pushed up the cost of a range of goods, including furniture, clothing, and large appliances, according to the U.S. Labor Department. Consumer prices rose 2.7 per cent in June from a year earlier, the highest level since February. The uptick in inflation was driven by a range of higher prices, including a 1 per cent rise in the cost of gasoline and a 0.3 per cent increase in grocery prices.

Key Takeaways:

  • Inflation rose 2.7 per cent in June from a year earlier, the highest level since February, according to the U.S. Labor Department.
  • The uptick in inflation was driven by a range of higher prices, including a 1 per cent rise in the cost of gasoline and a 0.3 per cent increase in grocery prices.
  • Excluding volatile food and energy categories, core inflation increased 2.9 per cent in June from a year earlier, up from 2.8 per cent in May.
  • The cost of appliance prices jumped for the third straight month, and toys, clothes, audio equipment, shoes, and sporting goods all got more expensive and are all heavily imported.
  • The White House pushed back on claims that the report showed a negative impact from tariffs, citing the cost of new cars being down despite the 25 per cent tariffs on autos and 50 per cent tariffs on steel and aluminum.
  • The administration also noted that despite the June bump in apparel prices, clothing prices are still cheaper than they were three months ago.
  • The report set up a broader political battle over Trump's tariffs, a fight that will ultimately be determined by how the U.S. public feels about their cost of living and whether the president is making good on his 2024 promise that his agenda would help the middle class.
  • The White House has argued that the country's trade policies "have been very successful" in reducing the U.S. trade deficit.

Statistics:

  • Inflation rose 2.7 per cent in June from a year earlier.
  • Core inflation increased 2.9 per cent in June from a year earlier.
  • The cost of gasoline rose 1 per cent from May to June.
  • Grocery prices increased 0.3 per cent from May to June.
  • The cost of appliance prices jumped 2.1 per cent in response to the duties.
  • Orange prices leaped 3.5 per cent from May to June.
  • Orange prices are 3.4 per cent higher than a year ago.
  • Inflation has increased every month since January.
  • Consumer prices rose 0.3 per cent from May to June.
  • The cost of rent rose 3.8 per cent in June compared with a year ago, the smallest yearly increase since late 2021.

Sources:

  • The Associated Press
  • U.S. Labor Department
  • Eric Winograd, chief economist at asset management firm AllianceBernstein
  • Jerome Powell, Federal Reserve chair
  • White House

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