US Inflation Rises for First Time in 5 Months Amid Tariff Pressures

US inflation edged higher for the first time in five months as tariff costs began rippling through the economy. The Core Consumer Price Index (CPI), which excludes volatile food and energy prices, rose 0.3% in June—the largest monthly gain since January. This follows a tepid 0.1% increase in May, with the annualized rate expected to climb to 2.9%.

Retail sales data due Thursday is projected to show only marginal growth after two consecutive declines, reflecting consumer caution amid a cooling labor market. Federal Reserve officials remain hesitant to cut interest rates, wary of persistent inflation risks tied to trade policies. The next FOMC meeting on July 29-30 will scrutinize whether these pressures warrant a prolonged hold.

Economists anticipate inflation will build momentum in coming months, though retailers remain reluctant to pass full costs to consumers. June's trends mirror May's pattern: modest tariff-driven goods inflation offset by softer services prices. The interplay between trade policy and consumer resilience will shape the Fed's next move.