CPI rose in June to 2.7% annual rate, highest since February

The Consumer Price Index in June rose 2.7% on an annual basis, a sign inflation around the U.S. is creeping up after declining earlier this year.

By the numbers

The CPI was forecast to rise 2.7% last month, higher than last month’s rate of 2.4%, according to economists polled by financial data firm FactSet. June’s reading is the highest since February, when the CPI rose 2.8% on an annual basis.

On a month-over-month basis, the CPI rose 0.3%, which is the largest increase since January and in line with economists’ forecasts. 

The CPI, a basket of goods and services typically bought by consumers, tracks the change in those prices over time.

So-called core inflation, a measure of CPI that excludes food and energy prices (which are more volatile), rose by 2.9% over the past 12 months, according to the Bureau of Labor Statistics. That’s slightly below the 3% predicted by economists polled by FactSet.

Grocery prices rose 3% on an annual basis last month, higher than the overall inflation rate. Items that have seen big cost increases since last June include eggs, which are up 27.3%, roasted coffee, which is up over 12.7%, and ground beef, which is up 10.3%.

Meanwhile, energy prices rose 0.9% on a month-over-month basis, following a 1% drop in May.

What’s driving the numbers

June’s reading indicates that tariffs might gradually be starting to drive up prices in certain categories. Everyday items, from produce to apparel, could be susceptible to new levies if they are imported from abroad. Fed Chair Jerome Powell last month predicted that tariffs could start to push up prices in the second half of the year.

President Trump recently announced he would issue a flurry of new tariffs on over 20 countries, which he said will go into effect Aug. 1, 2025, extending the deadline of a 90-day pause on reciprocal tariffs that came to an end earlier this month.

In response to the CPI data, Adam Crisafulli, head of Vital Knowledge, said in an email note that certain categories exposed to tariffs (apparel, home furnishings, appliances, footwear and toys, for example) saw some upward pressure, while others, such as like vehicles, did not.

However, analysts say inflation still remains in check. “While today’s CPI release showed some early signs of tariff impact, on the whole underlying inflation remained muted,” said Kay Haigh, global co-head of fixed income and liquidity solutions in Goldman Sachs Asset Management. “Price pressures, however, are expected to strengthen over the summer and the July and August CPI reports will be important hurdles to clear.”