U.S. consumer prices posted their largest monthly gain since January, driven by rising costs in housing and food, while core inflation remained tame—offering mixed signals to the Federal Reserve.
The Consumer Price Index rose 0.3% in June, up from a 0.1% increase in May, according to the Labor Department. Gains were led by rebounds in gasoline and shelter costs. Food prices also climbed 0.3%, as coffee and beef posted notable increases. Meanwhile, prices for airline fares, hotel stays, and both new and used vehicles declined.
Despite mounting signs that tariffs are filtering into broader inflation, economists say underlying price pressures remain under control for now. “The data shows some early impact from tariffs, but core inflation remains contained,” said Kay Haigh of Goldman Sachs Asset Management.
On a year-over-year basis, inflation hit 2.7%, accelerating from May’s 2.4%. Still, the Federal Reserve is unlikely to move quickly. Officials are expected to hold rates steady later this month, keeping the benchmark between 4.25% and 4.50%.
Investors now see lower odds of a July rate cut, placing bets instead on potential easing in September. Treasury yields were mixed and the dollar remained steady following the report, reflecting a wait-and-see approach to future policy moves.
