Powell’s caution on tariff-driven inflation is right
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Critics of President Trump's tariff policies have been waiting for the import taxes to raise the inflation rate. That effect may be beginning.
A number of factors, including a lack of significant gains in auto prices, are masking the extent of the shift.
Egg prices cooled significantly in June, deviating from an overall rise in prices. The price of eggs climbed 27% over the year ending in June, which marked a slowdown from 41% year-over-year growth in May. Under Trump, inflation has defied doomsday predictions and helped to propel sturdy economic performance.
Current tariff collections equate to 0.1% monthly inflation, aligning with recent CPI data. See why I’m skeptical that tariffs will lead to widespread inflation.
Rising rents were the main driver of inflation in June. But the price of clothing, appliances and toys also jumped — which likely reflects the effects of import taxes. Clothing prices rose 0.4% while the price of appliances and toys jumped nearly 2%.
The prices for food at home rose 0.3 in June, while food away from home, meaning restaurants, ticked up 0.4% on a monthly basis. Notably, the Trump administration has recently imposed a 17% tariff on Mexican tomatoes. The energy index edged up 0.9% in June, as gasoline prices jumped 1% over the month but shed 7.9% for the year.
A new report found inflation on the rise in June, another indicator of the affect Donald Trump's tariffs are having on the US economy.
Consumers’ worst fears about tariff-induced inflation have receded, though they are still wary of price increases to come.