On the one hand, Tuesday’s consumer price index report is likely to enrage the president because a slight uptick in CPI inflation gives the Federal Reserve all the more reason to hold on until its September meeting to cut the federal funds rate. But on the other hand, President Donald Trump received yet another month of data indicating that his near-universal tariffs still have not trickled down into increased prices borne by consumers.
CPI inflation in June rose 0.3%, in line with expectations, and the Fed’s preferred measure of core CPI, which excludes the volatile categories of food and energy, actually came in below expectations at 0.23%. On an annual basis, headline CPI increased from 2.35% to 2.67%, while core CPI rose from 2.77% to 2.91%. But the real trouble is that core CPI on a three-month annualized basis fell to 1.7% in May, below the Fed’s 2% maximum inflation target, but went back up to 2.4% in June. No matter how you splice the data, inflation rose in June after months of heading in the correct direction, and not in a way the Fed is likely to ignore.
