Inflation Picks Up as Tariffs Start to Take Effect

Inflation has accelerated again against the backdrop of President Donald Trump’s tariffs.

The consumer price index (CPI) for June increased 0.3% on a monthly basis and rose 2.7% for the 12 months ending in June, the U.S. Bureau of Labor Statistics (BLS) reported July 15. That is above May’s 2.4% figure and marks the second month of increases.

The index for shelter rose 0.2% in June and was the primary factor in the monthly increase, according to the BLS. The energy index inched up 0.9% in June as the gasoline index increased 1% over the month. The index for food increased 0.3% as the index for food at home rose 0.3% and the index for food away from home rose 0.4% in June.

Core inflation, which excludes volatile food and energy prices, rose 0.2% in June — following a 0.1% increase in May — and 2.9% annually.

Economists have been predicting that Trump’s sweeping tariffs on imported goods would contribute to higher costs.

Coupled with the latest uptick in personal consumption expenditures, the uptick in inflation is “consistent with a shift toward upward pressure on prices following a period of relatively subdued inflation,” said Andrea Medici, labor economist at SHRM.

“While the June CPI report may provide initial evidence of inflationary pressures — potentially due to the impact of trade policy, among other factors — the next few months will mark a stretch of key inflation data as it will be increasingly difficult for businesses to absorb higher import duties as pre-tariff inventories are consumed,” Medici said. It is widely expected that the Federal Reserve will not lower the federal funds rate at its next meeting at the end of this month, he added.

Although inflation has cooled significantly in the past couple of years, it still remains a significant concern for employers. SHRM’s CHRO Priorities and Perspectives report, released earlier this year, found that wage inflation and inflation or rising costs of goods and services were CHROs’ top two macroeconomic concerns.

Real Earnings Decrease

Meanwhile, real average hourly earnings for all employees decreased 0.1% from May to June, seasonally adjusted, the BLS reported separately. This result stems from an increase of 0.2% in average hourly earnings combined with the increase of 0.3% in the CPI.

Real average weekly earnings decreased 0.4% over the month due to the change in real average hourly earnings combined with a decrease of 0.3% in the average workweek. 

From June 2024 to June 2025, real average hourly earnings increased 1%, seasonally adjusted.