Here’s how Trump’s tariffs could be impacting prices for US consumers

By Alicia Wallace, CNN

(CNN) — US inflation heated back up in June, rising to its highest level in four months, as price increases — including those from tariffs — packed a bigger punch.

Consumer prices rose 0.3% last month, pushing the annual inflation rate higher to 2.7%, the highest since February, according to the latest Consumer Price Index data released Tuesday by the Bureau of Labor Statistics.

Tuesday’s data came right in line with economists’ forecasts for the headline CPI to rise from the 0.1% monthly and 2.6% annual increases reported in May.

They expected higher gas prices would help lift the overall index (which was the case) and anticipated that a broader suite of goods would show the effect of businesses passing along higher import costs to consumers (which was also the case).

“Tariffs are starting to bite,” Heather Long, chief economist at Navy Federal Credit Union, told CNN in an interview. “It wasn’t as bad as expected, but you can see it in the data.”

Excluding gas and food, which tend to be quite volatile, core CPI came in below expectations by rising 0.2% from May and 2.9% for the 12 months ended in June. However, that’s an acceleration from 0.1% and 2.8%, respectively, the month before.

Stocks were mixed Tuesday morning. The Dow was down 250 points, or 0.5%. Meanwhile, the S&P 500 was mostly flat and the tech-heavy Nasdaq rose 0.65%.

“While it’s a relief to see Tuesday’s CPI in line with expectations, it still showed that inflation was hotter in June than it was in May,” Skyler Weinand, chief investment officer at Regan Capital, said in an email.

A fits-and-starts trade policy makes its mark

In recent months, President Donald Trump has enacted a sweeping trade policy of tacking steep tariffs on most goods that come in to America.

The sheer breadth of the tariffs as well as the fits-and-starts approach to their implementation has roiled markets and caused heightened uncertainty among businesses and consumers as to how much prices would move higher.

However, inflation has remained relatively tame in recent months due to a variety of factors, including ongoing disinflation trends in housing and other key services, falling gas and travel prices (in part due to weakened demand from uncertainty), and businesses loading up on pre-tariff inventories.

Economists cautioned that the tariff-related price hikes wouldn’t come quickly nor in one fell swoop and would likely start to hit consumers more as the year went on.

“It’s really been an inventory story,” Long said. “Businesses have done an excellent job of managing inventory, particularly the large retailers heading into April” when the bulk of the tariff hikes were put into place.

The larger retailers were carrying about three months’ worth of extra inventory, Long said.

“And so, you do the math in your head and you’re thinking, ‘OK, this summer, right?’” she said. “They’re eventually going to run out of inventory or run down their inventory and have to bring in more items with the tariff costs.”

She added: “This feels like inning No. 1, the early stages of what will likely be more and more items showing that price increase.”

How tariff-exposed goods prices are rising

On a relatively scattered basis, some items with high exposure to tariffs (the United States imports about 80% of toys from China, for example) have become more expensive, both private sector and federal reports such as CPI have shown.

In May, for example, the CPI report showed very few widespread impacts from higher tariffs; however, prices were on the rise for a smattering of goods — such as toys, appliances, sporting goods and tools — typically imported or heavily reliant upon imported materials and components.

The June CPI data showed a similar story, with more goods categories joining in on the price hikes:

Commodities excluding food and gas: This index strips out the oft-volatile food and energy categories and is being closely scrutinized in the wake of higher tariffs. Prices rose 0.2% in June after being flat in May.

Computers, peripherals and smart home assistants: Prices heated up in this category for the third-consecutive month, rising 1.4%, the highest monthly increase since January 2024. While Trump gave a reprieve for tech giants, exempting some smartphones, computers and electronics from tariffs, those products and parts are still exposed to the higher base tariff on Chinese imports. (Notably, Trump also has promised to levy higher tariffs on semiconductors, the chips that power scores of everyday items.)

Windows and floor coverings and other linens: After rising 0.3% from May to April, prices in this category surged 4.2% higher in June, a record-high increase (BLS started tracking this category in early 1999). The US textile industry has shrunk considerably in recent decades, resulting in a high reliance on imported linens.

Appliances: Prices here leapt 1.9% in June after rising 0.7% in April and 0.6% in May. It was the highest monthly jump in appliance prices since August 2020, when homebound Americans upped their purchases of home goods during the Covid pandemic. Last month, the Trump administration extended the 50% tariffs on steel and aluminum to “derivative products,” including consumer appliances such as dryers, washing machines, refrigerators, ovens and garbage disposals.

Tools, hardware and supplies: During much of 2023 and 2024, prices fell for this category. In June, prices rose 0.7%, marking the fifth-straight month of increases.

Sporting goods: The pace of price hikes accelerated here, with the index rising 1.4% in June, up from 0.3% in May. The June increase is the largest in 18 months.

Toys: For the second month in a row, prices rose by 1.4%, a back-to-back jump only seen during periods of abnormally high inflation (2022, 1980).

Video equipment: Prices surged a record 4.5% in June after rising 1% in May in this category that typically has seen more deflation than inflation since 1998, when the BLS started tracking it.

This story is developing and will be updated.

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CNN’s John Towfighi contributed to this report.