Increase marks second consecutive monthly uptick, signaling persistent price pressures in key sectors.
Key Points
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The Consumer Price Index (CPI), which measures the overall cost of goods and services, rose by 0.3% in June, bringing the annual inflation rate to 2.7%, matching analysts’ expectations.
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Core inflation, which excludes volatile food and energy prices, increased by 0.2% for the month, with the annual rate reaching 2.9%, also in line with forecasts.
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While June’s data showed mixed effects of tariffs on prices, some signs indicate tariffs are influencing costs—apparel and home furnishings saw price increases, whereas vehicle prices declined.
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President Donald Trump responded to the report by renewing his call for the Federal Reserve to cut interest rates.
Consumer prices climbed in June as President Donald Trump’s tariffs gradually impacted the U.S. economy.
According to the Bureau of Labor Statistics report released Tuesday, the Consumer Price Index (CPI)—a broad measure of goods and services costs—increased by 0.3% for the month, pushing the annual inflation rate to 2.7%. This figure matched the Dow Jones consensus, marking the highest yearly rate since February and remaining above the Federal Reserve’s 2% target.
When excluding the often-volatile food and energy sectors, core inflation rose 0.2% for the month, bringing the annual rate to 2.9%, in line with expectations. However, the monthly core increase was slightly below the predicted 0.3% gain.
U.S. consumer price index
Year-over-year percent change | Jan. 2021–June 2025
Note: Not seasonally adjusted
Source: U.S. Bureau of Labor Statistics
Data as of July 15, 2025
Before June, inflation had generally been trending downward throughout the year, with the headline CPI at a 3% annual rate in January and gradually slowing in the following months—despite concerns that President Trump’s trade war would push prices higher.
While June’s data showed mixed results regarding the impact of tariffs on prices, there were clear signs that the duties are starting to take effect.
Vehicle prices declined during the month, with new vehicle costs dropping 0.3% and used cars and trucks falling 0.7%. On the other hand, tariff-sensitive categories like apparel saw prices rise 0.4%, and household furnishings—also affected by tariffs—increased by 1% for the month.
U.S. consumer price index
Month-to-month percent change | Jan. 2021–June 2025
Note: Seasonally adjusted
Source: U.S. Bureau of Labor Statistics via FRED
Data as of July 15, 2025
Shelter prices rose modestly by 0.2% in June, but the Bureau of Labor Statistics noted this category remained the largest contributor to the overall CPI increase. Over the past year, shelter costs climbed 3.8%. Within this category, the measure of homeowners’ equivalent rent—the estimated amount homeowners could receive if they rented out their properties—increased by 0.3%. Meanwhile, lodging away from home declined by 2.9%.
“It’s really hard to point to this report or any details in the report and say, ‘Aha! See what’s happened to prices because of tariffs,’” said Dan North, senior economist at Allianz Trade North America. “You get these pretty massive tariff increases. It’s bound to pass through to consumers, and I still think it will, but it’s not in this report so far.”
President Donald Trump seized on the report to renew his call for the Federal Reserve to cut interest rates. Posting on Truth Social, he wrote: “Consumer Prices LOW. Bring down the Fed Rate, NOW!!!” He later added, “Fed should cut Rates by 3 Points. Very Low Inflation. One Trillion Dollars a year would be saved!!!”
Mixed Indicators
Price pressures emerged from multiple sectors, while some areas showed easing. Food prices rose 0.3% for the month, bringing the annual increase to 3%. Energy prices rebounded with a 0.9% gain after slipping in May, though they remain slightly lower than a year ago. Medical care services climbed 0.6%, and transportation services edged up 0.2%.
Despite rising prices, inflation-adjusted hourly earnings fell 0.1% in June, according to a separate BLS report. On a yearly basis, real earnings rose 1%.
Markets responded calmly to the inflation data. Stock futures were mixed, and Treasury yields mostly declined.
Throughout the period of relatively subdued inflation, Trump has urged the Federal Reserve to lower interest rates—something the Fed has not done since December. The president insists tariffs aren’t driving inflation higher and argues the Fed’s inaction is increasing the costs associated with the nation’s growing debt and deficit.
Federal Reserve Chair Jerome Powell and other central bankers have held firm, stating the U.S. economy is strong enough to wait and observe how tariffs impact inflation. Trump has called for Powell’s resignation and is expected to nominate a replacement when Powell’s term ends in May 2026.
Market expectations anticipate the Fed will hold rates steady at its late-July meeting and then cut rates by a quarter percentage point in September.
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