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U.S. inflation saw an uptick last month, coinciding with the implementation of President Donald Trump’s tariffs, which resulted in higher prices for a range of consumer goods, including clothing and coffee.
According to the Labor Department, consumer prices rose by 2.7% in the year leading up to June, a rise from the 2.4% recorded the previous month. This represents the most rapid pace of price increases since February.
The primary contributors to this increase were elevated energy and housing costs, such as rental rates.
The data also suggests that consumers are beginning to experience the effects of tariffs, as some companies are starting to pass on the costs associated with the Trump administration’s new taxes on imports.
Specifically, coffee prices increased by 2.2% from May to June, while citrus fruit prices climbed by 2.3%. Toy prices saw a rise of 1.8%, appliance prices increased by 1.9%, and clothing prices experienced a 0.4% gain – marking the first increase in the sector in several months.
However, the overall increase remained moderate and largely aligned with expectations, as it was offset by price declines in categories such as new and used cars, airfare, and hotel bookings.
“There is a trickle of what is likely tariff-induced inflation in some categories, particularly household appliances and furnishings,” noted Olu Sonola, Head of U.S. Economic Research at Fitch Ratings.
“This trickle is likely to gain momentum in the coming months.”
The average effective tariff rate in the U.S. has surged this year, following the Trump administration’s imposition of a 10% tax on a wide array of imported goods, with even higher levies applied to key items like steel and automobiles.
Although some more aggressive plans were previously suspended, President Trump has recently revived tariff threats, signaling intentions to raise duties on goods from numerous countries starting August 1. Ongoing negotiations have raised hopes that agreements will avert the imposition of these measures.
President Trump stated on Tuesday that he had reached a “great deal” with Indonesia, though specifics were not provided. To date, tariff discussions with other nations have resulted in tariff levels for goods from those countries that are significantly higher than those in place at the start of the year.
The President contends that these tariffs will safeguard American businesses from foreign competition, stimulate domestic manufacturing and job creation, and generate revenue for the government.
The White House has refuted forecasts suggesting that these measures will lead to increased prices for American consumers, asserting that companies and foreign exporters will absorb the costs.
This perspective contrasts with the views of most economic forecasters, who have maintained that the U.S. economy has been somewhat insulated thus far due to firms building up inventories of goods in advance.
Despite pressure from President Trump to lower interest rates, the U.S. central bank has refrained from making any adjustments, citing a need for more time to fully understand the impact of these measures.
Analysts indicated on Tuesday that they do not anticipate any rate cuts at the Federal Reserve’s meeting this month and remain divided regarding potential action in September, given the latest economic figures.
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Tourism bosses and traders believe a number of factors have led to the drop in visitor numbers.
It comes after US tomato growers accused their Mexican counterparts of dumping their produce.
The move would reverse a US ban on sales of the high-end chip to the world’s second largest economy.
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