Inflation Creeps Up Again — and Trump’s Tariffs Might Be to Blame

It looks like prices are on the rise again — and this time, Trump’s trade war could be fueling the fire.

New data from the Commerce Department shows that the Federal Reserve’s favorite inflation gauge — the Personal Consumption Expenditures (PCE) index — rose 2.6% in June compared to a year ago. That’s up from 2.4% in May, and still well above the Fed’s 2% comfort zone. Strip out food and energy costs, and “core” inflation clocked in at 2.8%.

So what’s behind the uptick? According to economists, President Donald Trump’s new round of broad-based tariffs is starting to show up in price tags across the country. Furniture, appliances, and electronics — most of them imported — all jumped in price last month. Furniture alone was up 1.3%, and appliances surged nearly 2%.

Meanwhile, the Fed isn’t budging. The central bank held interest rates steady at 4.3% for the fifth straight time, despite loud and very public pressure from Trump, who slammed Fed Chair Jerome Powell again this week as “TOO ANGRY, TOO STUPID, & TOO POLITICAL.” (Powell’s real sin? Not cutting rates fast enough for Trump’s taste.)

Powell, for his part, said the Fed needs time to figure out whether the inflation bump is a one-off or the start of a longer trend. But he admitted the situation is complicated by tariffs, which could continue to push prices up — especially with another round of levies kicking in on August 1.

The new data isn’t exactly reassuring. Prices rose 0.3% just from May to June. Gas prices ticked up 0.9%. Groceries? Up 0.3%. On the flip side, travel got a little cheaper — airfare dropped 0.7% and hotel stays plunged 3.6% — which helped keep overall spending in check.

Still, Americans aren’t exactly splurging. Consumer spending rose 0.3% in June, but once you factor in inflation, it barely nudged higher — just 0.1%. Incomes rose, too, but not enough to make a real dent.

Economists are keeping a close eye on what’s next. Some say if inflation keeps rising, the Fed may stay put in September. Others argue that sluggish consumer spending and stagnant income could justify a rate cut — though probably not the drastic one Trump wants.

With input from the Associated Press, the New York Times, CNN, and the Washington Post.