We – and more importantly the Federal Reserve – got another look at inflation this week as the June reports of consumer inflation (CPI) and wholesale inflation (PPI) were released

June’s CPI report was the first to show some (albeit minor) impact from tariffs. The index rose 0.3% month over month and 2.7% year over year. Items such as household furnishings, appliances, and apparel (most exposed to tariffs) showed marked pickups from prior months. Even services, which had bee declining, showed a 0.4% rise in June, the strongest increase in that category since January.

June’s PPI report (again, a measure of wholesale spending) was somewhat milder. The report showed no change in June, lower than the forecasted 0.2%. Year over year, prices rose 2.3%. This report seems to show little impact from tariffs as of yet (in contrast to certain elements of CPI noted above).

While the signs of increasing prices were minor, there are definitely there especially on the consumer side of things. The Federal Reserve continues to emphasize their desire to get inflation closer to 2% and this month’s reading did little to help that cause. This makes it harder for officials to move forward with cutting interest rates as they either need meaningful signs that inflation is indeed under control or that the labor market is weakening rapidly. So far, neither have come to pass, leading to the belief that the Fed will leave rates as is for now (much to the chagrin of President Trump who continues to publicly battle against Fed Chair Powell).

Overall, these inflation readings could have been much worse given the concerns over tariffs just a few months ago. However, they weren’t quite good enough to increase confidence in an imminent rate cut. We (and markets) remain in wait and see mode!

Onward we go,