US inflation surges to 2.7% in June: What's the reason?
What's the story
US inflation surged in June, with the effects of President Donald Trump's tariffs becoming apparent in consumer prices. The Consumer Price Index (CPI) rose to 2.7% last month, up from 2.4% in May. Core CPI, which excludes the energy and food prices, also saw a slight increase to 2.9%, compared to May's 2.8%.
Result
Impact of tariffs on consumer prices
Business leaders have long warned that Trump's high and unpredictable tariffs would lead to increased consumer prices. After a period of stability in spring, when many of Trump's highest tariffs were on hold, prices began to rise in May and continued into June. This trend is largely attributed to the impact of the tariffs on various goods and services.
Tariff
Average tariff rate at highest since 1933
As per the Yale Budget Lab, Americans are currently facing an average tariff rate of 18.7%, the highest since 1933. This has contributed significantly to the recent rise in consumer prices across various sectors of the economy.
Potential impact
Tariffs on various trading partners
The current tariffs do not include those Trump has threatened to impose on other major US trading partners. Over the weekend, he threatened the EU and Mexico with 30% tariffs and Canada with a 35% tariff. Brazil is also set to face 50% tariffs in retaliation for the trial of former president Jair Bolsonaro, who is facing coup-related charges.