U.S. CPI Rises 2.7% in June, Rate Cut Bets Stay Alive

U.S. consumer prices increased by 2.7% in June.

U.S. consumer prices rose slightly more than expected in June but remained moderate enough to reinforce expectations of a potential Federal Reserve rate cut in September. The data comes as economists gauge the inflationary impact of aggressive U.S. tariffs.

The Labor Department reported that the annual headline Consumer Price Index (CPI) increased by 2.7% in June, exceeding forecasts of 2.6% and up from May’s 2.4%. On a monthly basis, CPI rose 0.3%, in line with estimates and higher than May’s 0.1%.

Core CPI, which excludes food and energy, rose 2.9% year-over-year and 0.2% month-over-month—both slightly below forecasts of 3.0% and 0.3%, respectively. Gains in categories like household furnishings, medical care, recreation, apparel, and personal care were partially offset by declines in new vehicle prices and airline fares.

Although CPI is not the Fed’s preferred inflation metric, its trend may influence rate decisions. Fed Chair Jerome Powell has cited inflation uncertainty as a reason for delaying rate cuts—drawing criticism from President Trump, who continues to push for lower borrowing costs and is reportedly considering replacing Powell.