Consumer prices rose in June on a seasonally adjusted basis,...
Sam Williamson@SWilliamsonEcon
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Jul 15, 2025
~2 min read
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Consumer prices rose in June on a seasonally adjusted basis, matching expectations but suggesting companies may be starting to pass on tariff-related costs. Shelter remained the main driver, rising 0.2% month-over-month. While a September rate cut is still possible, the report likely reinforces the Fed’s cautious stance. With inflation signals mixed, policymakers appear inclined to wait for clearer evidence before adjusting rates.
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Consumer prices rose 2.7% over the past year, up from 2.4% in May, while core inflation edged up to 2.9% from 2.8%. Although both figures were in line with consensus forecasts, the acceleration moves inflation further from the Fed’s 2% inflation target, reducing the likelihood of near-term rate cuts.
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Core goods inflation—excluding food and energy—rose 0.2% in June, the largest monthly gain since February. Year-over-year, it jumped to 0.6% from 0.27% in May, possibly reflecting early effects of new tariffs. Core services also rose 0.3% on the month and 3.6% year-over-year. With core services disinflation stalling and goods inflation picking up, overall core CPI is facing renewed upward pressure.
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Prices in several tariff-sensitive categories rose in June. Household furnishings and supplies increased 1.0%, video and audio products rose 1.1%, toy prices jumped 1.8%, and apparel climbed 0.4% from May. In contrast, new and used vehicle prices fell 0.3% and 0.7%, respectively—possibly as dealers offered incentives to counteract a slowdown in demand following a surge in pre-tariff purchases earlier this year.
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The shelter disinflation story continues, with shelter prices rising just 0.2% in June—the slowest monthly increase since August 2021. Year-over-year, shelter inflation eased to 3.8%, its lowest since November 2021, offering some relief to overall inflation. However, the room for further deceleration may be limited. Leading indicators, such as Zillow’s rent index, show rent growth has remained above 3% since last July. Given the lag in how shelter costs feed into CPI, this could signal a floor for shelter inflation in the coming months, potentially slowing broader disinflation progress.
