The news: Inflation ticked up in June in a sign that companies are beginning to pass on tariff costs to consumers.

• The consumer price index rose 0.3% MoM, the largest monthly increase since January, the US Labor Department reported.
• The annual rate of inflation reached 2.7%, an acceleration from 2.4% in May.
• Excluding food and energy, core CPI increased 2.9% YoY, slightly faster than the 2.8% seen across the previous three months.

By the numbers: Price pressures were most evident in categories with the greatest exposure to tariffs.

• The cost of household furnishings rose 1% MoM, the biggest jump since 2022, as the furniture industry grapples with higher duties on key suppliers and raw materials.
• Toy prices increased 1.8% MoM in June, with more hikes likely to follow “in the August through October timeframe,” Hasbro CEO Chris Cocks told CNN, citing the industry’s production timelines.
• The cost of major appliances such as washing machines rose 1.9% MoM in June, following a 4.3% spike in May. The upward pressure is set to continue now that these items are subject to 50% duties on their steel and aluminum content, along with President Donald Trump’s threat to impose 50% tariffs on copper starting August 1.

Grocery spending under pressure: So far, the increases have largely been modest—a reflection of the fact that many companies are working through inventory they brought in either before the tariffs took effect or during their extended pause. But one area where consumers have been unable to escape the immediate effects of Trump’s economic policies is the grocery aisle.

• Grocery inflation has ticked up steadily throughout the year, going from 1.9% in January to 2.4% last month, as the Trump administration’s trade policies boost prices for imported commodities like bananas, coffee, and chocolate.
• Nearly half (45%) of US consumers say they are spending much or somewhat more on groceries due to tariff-related price increases, according to a June Morning Consult survey.

The strain on food budgets will only increase in coming months as a flurry of new tariffs come into play.

• A newly-announced 17% tariff on Mexican tomato imports—which account for 70% of the US supply—will lead to higher prices in grocery stores and restaurants.
• Coffee prices could surge starting August 1 should President Trump follow through on his promise to impose 50% tariffs on imports from Brazil, which account for 30% of US coffee consumption. The country is also an important source of orange juice and beef.
• Higher tariffs on goods from Canada, Mexico, and the EU will also drive up prices for staples like produce, olive oil, and cheese.

Our take: June’s CPI data shows the toll tariffs are beginning to take on consumers’ buying power. While real wage growth remains in positive territory for now, that could change quickly once more companies begin to pass on a greater share of tariff costs to consumers, as the vast majority have signaled they’ll do.