U.S. consumer price index creeps higher in June

In the consumer price index report for June released on Tuesday, one can see the outlines of tariff-induced inflation that will become more prominent in the July to October period.

Strong increases in audio equipment, apparel, appliances and furniture in addition to an outsized 0.9% increase in energy costs on the month underscored the 0.3% monthly increase in top-line inflation and the 2.7% rise from one year ago.

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The outline of inflation through trade in durables and nondurables is evident inside the June report as key service and shelter inflation modestly cooled but still remains between 3.5% and 4%.

This data is in line with inflation moving higher to a range between 3% and 3.5% by the end of the year, which will keep the Federal Reserve from any rate cuts until December.

The data

Core inflation increased by 0.2% in June and was up by 2.9% over the past year.

Gasoline costs increased by 1% on the month while services and services excluding energy were up by 0.3%. From one year ago, gasoline prices fell by 8.3%, services rose by 3.8% and services excluding energy increased by 3.6%.

Housing costs advanced by 0.3% on the month and by 4% over the past year, shelter increased by 0.2% and 3.8%, respectively, while the policy-sensitive owners’ equivalent rent series increased by 0.3% and 4.2%.

Food and beverages increased by 0.3% on the month, apparel by 0.4% and transportation by 0.1%, while airline fares declined by 0.1% and recreation costs advanced by 0.4%,

In the details of the report, household furnishings and supplies advanced by 1% while appliances were up by 1.9%. In addition, audio and video equipment prices continued to soar and were up by 1.1% with audio equipment rising by 4.5% on the month.

Once one looks at the import channel in furniture, appliances and apparel—exactly what one would focus on because of large tariff increases on Chinese imports—the impact of tariffs becomes clear.

The takeaway

Inflation has started a slow climb as signs of tariff-induced inflation are now evident within durable and nondurable imports.

That prompts an important question: Will service and housing inflation, which is easing but still elevated, cool further to offset what will be a more pronounced increase in durable and nondurable goods?

Our sense is that the Federal Reserve will continue to display patience as the direction of inflation evolves.

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This article was written by Joseph Brusuelas and originally appeared on 2025-07-15. Reprinted with permission from RSM US LLP.
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