Inflation Reignites as Businesses Pass Tariff Costs Onto Consumers

The tariffs are hitting home as businesses pass along higher costs to end customers.

As measured by the Consumer Price Index released Tuesday (July 15), consumer prices were up 0.3% in June, and the annual inflationary pace was 2.7%, per data from the Bureau of Labor Statistics.

Inflation quickened from the 0.1% gains that had been seen in May (month over month) and the 2.6% annualized gain logged that month from the year ago period.

Some of the key staples kept seeing price increases.

Shelter prices rose 0.2% in June and remained the main contributor to the overall monthly increase. Over the past six months, the shelter index has risen 1.7%, its lowest half-year increase since June 2021.

After falling 1% in May, the energy index rose 0.9% in June. Still, energy prices remain 0.5% below their December 2024 levels. Gasoline prices increased 1.0% in June but are down 7.2% so far in 2025. Piped gas rose 0.5% in June and has climbed 11.6% over the past six months. Electricity prices increased 1% in June, contributing to a 4.7% rise over the same period.

Pricier to Eat, Even at Home

The food index rose 0.3% in June, matching May’s increase and bringing the year-to-date gain to 1.5%. Food at home also rose 0.3% in June and 1.1% over the past six months. Nonalcoholic beverages were up 1.4%, with coffee prices jumping 2.2% in June and 8.7% year-to-date.

There were some declines in items that are the bedrock for breakfast.

Meanwhile, cereals and bakery products fell 0.2%, and meats, poultry, fish and eggs declined 0.1%, driven by a 7.4% drop in egg prices. Dairy products declined 0.3% in June.

But these declines were partly offset by a 2.0% increase in beef. Despite the monthly dip, this category is up 2.6% since December 2024.

The index for food away from home rose 0.4% in June. Full-service meals were up 0.5%, and limited-service meals increased 0.2%. Over the past six months, food away from home rose 2.2%, the largest gain since January 2024.

Sticker Shock for Leisure, Apparel?

Overall, retail products increased 0.6% in June, primarily driven by motor vehicle parts and apparel prices increases.

Furniture and bedding rebounded with a 0.4% rise in June after falling 0.8% in May. Prices in this category are up 1.8% over the past six months, the largest increase since 2022.

Personal care products rose 0.3% in June and are up 2.1% so far this year. Apparel prices rose 0.4% in June, reversing declines in April (-0.2%) and May (-0.4%), though they are still down 0.6% over the last six months.

Sporting goods prices jumped 1.4% in June, the largest increase since January 2024. However, they remain down 0.3% over the past six months. Prices for recreational reading materials fell 1%, while musical instruments and accessories rose 0.2% in June.

The June data hints that there may be a shift in where consumers shop and what they buy. As PYMNTS Intelligence reported in April, as the first real salvos of the trade war began being lobbed to and from the United States, surveys of more than 2,200 consumers revealed that 30% and 23% of all consumers surveyed, respectively, would continue to buy personal care and household/lifestyle products when faced with price increases, which leaves a majority that would switch to cheaper options or to stop buying certain categories of goods altogether.

In other detail quantified by PYMNTS Intelligence, 31% of financially secure consumers reported they would continue buying at their current quantity and frequency. By contrast, only 13% of paycheck-to-paycheck consumers with issues paying their monthly bills indicate the same.