Tariffs Ignite Inflation Concerns

Inflation is expected to have accelerated in June, as widespread tariffs on imports may have increased prices for electronics, appliances, and other goods, economists forecast. Last month, consumer prices likely rose 2.6% year-on-year, up from a 2.4% increase in May, according to data from FactSet. The Labor Department is set to release its inflation report at 8:30 a.m. Eastern.

Worsening inflation could pose political challenges for President Donald Trump, who campaigned on promises to lower costs. Higher prices could also emphasize the Federal Reserve's challenges in managing short-term interest rates, despite Trump's calls for cuts. Core inflation, excluding volatile food and energy sectors, is expected to have risen to 3% year-on-year, also increasing 0.3% from May to June.

Trump's tariffs include a 10% duty on all imports and varying higher rates on specific goods. Last week, he threatened Europe with a new 30% tariff starting August 1. Although tariffs haven't significantly impacted inflation so far, core inflation remains above the Fed's 2% target, with potential policy implications.

(With inputs from agencies.)