based on materials from the site - By Cryptopolitan_News
After a prolonged period of restrained inflation, consumer prices in the U.S. peaked in June as businesses began to pass on the burden of rising costs of imported goods affected by tariffs.
According to a survey of economists conducted by Bloomberg, the core consumer price index (CPI), which excludes food and energy, rose by 0.3% last month, marking the largest monthly increase since January. This was preceded by a modest increase of 0.1% in May.
The annual core inflation rate is expected to accelerate to 2.9%, marking the first increase since the beginning of the year. While this suggests a slight impact from rising import tariffs, most economists expect inflation to pick up in the coming months, despite retailers' reluctance to burden consumers who are already saving amid declining labor market demand.
The Fed maintains a firm stance amid weak retail sales growth and ongoing tariff pressures.
Retail sales data, to be released on Thursday, are expected to show only a slight increase in June after two consecutive monthly declines. This will provide deeper insights into consumer behavior and refine GDP estimates for the second quarter.
Despite declining consumer spending, Fed officials remain cautious about lowering interest rates as they are concerned about ongoing inflation risks associated with tariffs. The next policy meeting is scheduled for July 29-30.
Bloomberg economists, including Estelle Ou, Stuart Paul, Eliza Winger, and Chris G. Collins, forecast that inflation trends in June will be similar to May's: limited price growth for goods related to tariffs, offset by ongoing weakness in services. Data gathered from the internet shows stable prices for items like appliances and furniture, but a decline in ticket prices for flights and used cars.
The global inflation pulse is accelerating as central banks prepare for the repercussions of tariffs.
Global markets are also beginning to recognize changing inflation trends. In Canada, June inflation data will be crucial ahead of the Bank of Canada's interest rate decision on July 30. Meanwhile, in China, data on gross domestic product, retail sales, and trade will be released this week, which should provide some insight into the impact of American tariffs on the country's economy.
Inflation in Japan is expected to fall to 3.3%, increasing pressure on the central bank. In the UK, persistently high inflation is not expected to ease, putting pressure on policymakers even amid slowing wage growth. In other countries, G20 finance ministers are gathering in South Africa amid escalating trade tensions and a rising threat of global inflation.
Wednesday could become a decisive deadline, ending Trump's pause on large-scale 'reciprocal' tariffs announced in April. However, this week he introduced a new tariff package, many of which will take effect on August 1.
Despite the escalation, most investors remain optimistic, believing that the U.S. will manage to avoid tariff increases, and hope that Washington will reach trade agreements with key partners like Japan and South Korea in the coming weeks, according to Anthony Saglimbene, chief market strategist at Ameriprise Financial.
"This is what the market has built into the foundation," Saglimbene said. "If we don't achieve this, I think there is a risk that we will face higher short-term volatility if the White House implements some of these aggressive tariffs."
As the impact of tariffs spreads through global supply chains, inflation and growth data, as well as central bank reactions, will remain in focus in the second half of the year.
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