Inflation Reverses Course Amid Tariff Pressures
After a steady descent earlier in the year, both national and regional inflation rates ticked upward in June as President Trump's new tariffs began filtering through the U.S. economy. The consumer price index (CPI) registered a 2.7% annual increase nationally—up from 2.4% in May and marking the highest level since February—while core inflation notched a 2.9% yearly gain. Notably, this uptick reflects a change in where price pressures are emerging compared to previous cycles: with housing costs receding from their fever pitch, imported goods are once again in the inflationary spotlight.
Imported Goods Take Center Stage
Tariffs are carving a clear path through specific sectors. While consumer costs remain subdued relative to crisis-era highs, categories reliant on imports—such as apparel and household furnishings—are absorbing much of the brunt. In the Seattle area, for example, household furnishings jumped 3.1% and clothing 2.8% between April and June, reflecting a national pattern. Economists point to these sectors as "good evidence" of tariffs directly transmitting into higher prices for end buyers.
Some goods continue to buck the upward trend: new and used vehicles posted price declines last month, possibly reflecting faltering demand or industry-specific factors. Still, other tariff-exposed products aren't escaping the squeeze. In June, national apparel prices climbed 0.4%—the sharpest jump since March—while window and floor coverings saw a record monthly increase of 4.2%.
Mixed Local and National Signals
Not all regions are feeling the pain equally. The Greater Seattle area saw an inflation rate matching the national number, but grocery prices soared by over 5%, more than double the U.S. average. Meanwhile, local energy costs rose sharply even as they fell nationwide. Businesses and families, wary of further price surges, have ramped up stockpiling—two-thirds of back-to-school shoppers began purchases weeks ahead of schedule, in anticipation of higher costs once new tariffs kick in this August.
Fed Stays the Course Amid Uncertainty
Despite political pressure—including President Trump's continued public calls for rate cuts—the Federal Reserve remains unmoved in its stance, keeping rates steady as officials monitor whether tariff-related cost increases are fleeting or here to stay. While real hourly earnings have slipped modestly month over month as inflation edges up, the overall wage gains over the year remain positive. With uncertainty over both the persistence of tariff impacts and the future path of consumer prices, policymakers and households alike face a landscape where the only constant is volatility.
