- Overall U.S. inflation was 2.7% in June, the highest in four months.
- Some economists say tariff impacts could ratchet up in coming months.
- Utahns weigh in on how Trump is doing on inflation fight.
Prices on goods and services increased at a 2.7% annual rate in June, ratcheting up from May’s 2.4% and an increase that may reflect the first signs of new trade tariffs impacting U.S. consumer outlays.
Tuesday’s Consumer Price Index report from the Labor Department shows prices moved up 0.3% on a monthly basis in June as overall inflation, which has been mostly moving down since a January reading of 3.0%, hit its highest level since February.
Core inflation, a measure that strips out volatile food and energy prices, hit an annual rate of 2.9% in June, up 0.2% from May to June.
Annual CPI inflation for the Mountain West states, which include Utah, was running well below the national rate last month at 1.9% but was up 0.2% from May.
June saw national price increases on a wide range of categories including gasoline, up 1% from May, grocery prices that increased 0.3% on a monthly basis and are now 3% higher than a year ago and housing-related costs that increased 0.2% over last month and are 3.8% higher over the past 12 months.
Tariff-sensitive goods also saw increases including appliances, toys, electronics, apparel and sporting goods.
“You are starting to see scattered bits of the tariff inflation regime filter in,” Eric Winograd, chief economist at asset management firm AllianceBernstein, told the Associated Press. Winograd added that the cost of long-lasting goods rose last month, compared with a year ago, for the first time in about three years.
Why are tariffs just now impacting prices?
Economists noted stockpiling of goods and raw materials by U.S. businesses in advance of tariff implementation dates earlier this year have mostly insulated consumers from price impacts so far, but may be running out.
Heather Long, chief economist at Navy Federal Credit Union, told CNN that U.S. consumers are at the start of a price cycle that could see rising tariff impacts.
“It’s really been an inventory story,” Long said. “Businesses have done an excellent job of managing inventory, particularly the large retailers heading into April” when the bulk of the tariff hikes were put into place.
The larger retailers were carrying about three months’ worth of extra inventory, Long said.
“And so, you do the math in your head and you’re thinking, ‘OK, this summer, right?’” she said. “They’re eventually going to run out of inventory or run down their inventory and have to bring in more items with the tariff costs.”
In a social media posting that appeared to be a comment on Tuesday’s inflation report, President Donald Trump once again called for the Federal Reserve to lower its federal funds rate.
“Consumer Prices LOW. Bring down the Fed Rate, NOW!!!”, Trump wrote in a Truth Social post.
Speaking to reporters at the Capitol on Tuesday, Utah GOP Congressman Blake Moore shared his concerns about trade levy impacts on U.S. inflation.
“To date, tariffs haven’t been highly inflationary, but if these numbers were to tick up at the same time as increased tariffs are starting to play out it could counterbalance the good that comes from what I believe is really sound tax policy (in the just-passed bill), and I wouldn’t want any downward pressure on the economy because of that,” Moore said. “We’ve seen revenue growth from these tariffs, but you also have the threat of inflation, so we’ll have to keep a close eye on it and be willing to accurately ... call it as it is.
“That’s why I love tariffs for leverage and getting good trade deals done and all those reasons to do it. But I don’t love tariffs as a long-term strategy for revenue increases, because you will see some inflationary pressure that I really don’t want to see.”
What Utahns say about Trump’s fight against inflation
Recent polling conducted by the Deseret News in partnership with the University of Utah’s Hinckley Institute of Politics found Utahns have mixed feelings when it comes to the president’s handling of inflation.
In a statewide online survey conducted in May, pollsters asked, “Do you approve or disapprove of the job Donald Trump is doing handling inflation?”
Overall results were essentially split with 50% of poll participants saying they somewhat or strongly approve and 43% falling into the somewhat or strongly disapprove camp. But that apparent equanimity dissolves when the responses are parsed by political affiliation.
Some 70% of Republican respondents versus 19% of Democrats weighed-in as somewhat or strongly approving of Trump’s work on inflation. On the flip side, only 22% of Republicans said they somewhat or strongly disapproved of Trump’s inflation tactics, against 81% of Democrats who participated in the poll.
The responses when asked “Has inflation during the Trump Administration gotten better, worse or stayed the same?” were, again, nearly evenly disbursed among the poll participants, outside the lens of politics.
Overall, 31% of respondents said inflation has gotten better since Trump took office, 36% said worse and 33% said inflation was about the same.
When flying their party colors, 41% of Republicans versus 14% of Democrats said inflation was better so far in Trump’s second term, while 19% of Republicans next to 70% of Democrats believe inflation has become worse. For those who told surveyors that inflation from their perspective has stayed the same since Jan. 20, 40% were Republicans and 17% were Democrats.