U.S. consumer prices likely rose in June 2025, as higher gasoline costs and tariff-driven price increases began to take hold.
The anticipated inflation uptick could delay the Federal Reserve’s plans to resume interest rate cuts, following months of relatively soft data.
Economists expect the Consumer Price Index (CPI) to have increased 0.3% in June, the largest monthly gain since January.
That follows a 0.1% rise in May.
The primary contributors are rebounding gasoline prices and costlier imported goods impacted by new tariffs.
President Donald Trump’s recent announcement of broader tariffs — set to begin August 1 — has put further inflationary pressure on the market.
The latest duties will affect imports from Mexico, Canada, Japan, Brazil, and the European Union.
Retailers and Economists Flag Pricing Concerns
Retailers like Walmart have already warned of price hikes due to rising import costs.
Economists believe the full effect of the tariffs was delayed because many firms relied on pre-tariff inventory.
However, business surveys and anecdotal reports suggest inflation will accelerate through the summer and into year-end.
“The June CPI report is likely to show inflation beginning to strengthen again, albeit not enough to alarm Fed officials at this juncture,” said Sarah House, senior economist at Wells Fargo.
Core Inflation Also Expected to Climb
Stripping out food and energy, the core CPI is also forecast to increase by 0.3%, the highest since January.
This reflects growing prices in tariff-exposed categories such as furniture and recreational goods.
Stephen Stanley, chief economist at Santander U.S. Capital Markets, said the inflation impact from tariffs “began to finally grow in frequency in June,” with more substantial effects expected in July and August.
Meanwhile, services inflation has remained muted, weighed down by soft demand in categories such as airfares and hotel rates.
In the 12-month period through June, headline inflation is expected to rise to 2.7% from 2.4% in May.
Core inflation is projected to tick up to 3.0% from 2.8%.
Fed Expected to Stay Cautious for Now
Despite rising inflation, the Federal Reserve is expected to keep its benchmark rate steady in the 4.25%–4.50% range when it meets later this month.
Minutes from the June 17–18 policy meeting revealed that only a few officials favored a rate cut as early as July.
Veronica Clark, an economist at Citigroup, said modest services inflation suggests that “higher goods prices are not leading to broad-based inflationary pressures,” leaving the Fed room to lower rates later if necessary.
Goldman Sachs anticipates monthly core CPI increases between 0.3% and 0.4% over the coming months.
They point to electronics, autos, and apparel as sectors likely to see price increases, though services inflation may remain subdued in the near term.