Inflation Watch: Will June CPI Confirm Tariff Pressure on U.S. Prices?

June CPI Report in Focus as Tariff Impact Comes Under Scrutiny

Traders will be closely watching today’s June Consumer Price Index (CPI) release at 12:30 GMT for signs that tariffs are finally exerting upward pressure on inflation.

Forecasts call for both headline and core CPI to rise 0.3% month-over-month, with the core index—excluding food and energy—expected to post a 3.0% annual increase, up from 2.8% in May.

These elevated figures could complicate the Federal Reserve’s rate policy outlook and strengthen the dollar, while adding pressure on U.S. equities.

Tariff-Driven Inflation Under the Microscope

This marks the first inflation report where the full effects of recent tariffs may show up in consumer pricing.

Analysts are particularly focused on core goods—autos, apparel, electronics, and furniture—as these sectors are more directly impacted by import duties.

In May, prices in these categories were surprisingly weak, with apparel and vehicle prices falling despite tariff pressures.

But June could show a sharp reversal. Goldman Sachs expects tariffs to add 0.08 percentage point to the core CPI, with increases likely in airfares, auto insurance, and select durable goods.

Mixed Signals from Economists

While some firms, including Pantheon Macroeconomics, expect a “clear” tariff impact in today’s data, others such as Nomura remain cautious.

They note that while certain categories may show inflationary pressure, the broader effect may remain subdued in the near term.

Shelter costs, a sticky component of CPI, are also expected to continue climbing and could provide additional upward momentum.

Policy Implications for the Federal Reserve

The Fed will view this report in the context of its 2% inflation target, though it relies primarily on the core PCE index.

Still, a strong CPI reading could reinforce policymakers’ concerns about persistent inflation and delay any rate cuts.

With the Federal Open Market Committee set to meet at month-end, today’s data could be pivotal.

As Natixis’ Chris Hodge noted, the Fed is unlikely to move on rates until it sees the peak of tariff-induced inflation.

Market Forecast: Bullish Dollar, Cautious Equities

A stronger-than-expected CPI print would likely push the dollar higher, supported by rising Treasury yields and a more hawkish Fed stance.

Equities, particularly rate-sensitive sectors, could face downside risk as expectations for near-term rate cuts are repriced.

Traders should monitor core goods and services closely—any sustained inflation in these segments may reinforce the Fed’s higher-for-longer rate strategy.

More Information in our Economic Calendar.