Latest news with #consumerprices
Yahoo
6 hours ago
- Business
- Yahoo
The forecast for the U.S. economy looks cloudy as inflation rises: ‘It would be wise for the Fed to remain on the sidelines'
The rate of inflation for the 12 months ending in June was 2.7%, according to a Bureau of Labor Statistics report released Tuesday. The inflation print was in line with economists' expectations. There were increases in key categories such as clothing, furniture, and leisure spending, which indicate tariff-related price increases could be starting to flow through the economy. Consumer prices rose in June at the level most economists expected, as the effects of President Donald Trump's signature tariff policy began to worm their way through the economy. In June prices rose 2.7% compared to the previous year, according to the Bureau of Labor Statistics' monthly report released on Tuesday. That was an increase from the May number, which had seen inflation rise 2.4% over the previous 12 months. 'Core' inflation—the metric that excludes food and energy prices—rose 2.9%. The metric can serve as a more reliable indicator of price levels because the food and energy categories are sometimes particularly volatile. Food and energy prices rose in 0.3% and 0.9% in the month of June. Both were increases from May when food prices rose 0.1% and energy costs had actually fallen 1% over the course of the month. Despite the fact that inflation picked up its pace, the latest report only captures part of the final impact that tariffs might have on the economy. Since the start of the year when it paused its rate-cutting cycle, the Federal Reserve has been clear that it feels no urgency to cut interest rates until it can better determine how inflation will play out. So far, the Fed's prediction is that the tariff-induced spike in inflation—should there be one—would happen around late August or early September. There is still too much uncertainty about what tariffs will ultimately do to the economy. The current operating assumption is that the inflation spike will be temporary. Tariffs will lead to a one-time shock that will raise prices before inflation settles back down to a more stable level. But with no certainty that will happen, and fearful of loosening interest rates ahead of a possible inflation spike, the Fed prefers to bide its time. Tuesday's report did little toward lighting the path for the Fed. Its task is only complicated by the White House's policy changes that keep shifting the economic landscape the central bank must traverse. 'While any tariff induced boost to inflation is likely to be short-lived, with higher tariffs being announced it would be wise for the Fed to remain on the sidelines for a few more months at least,' said Seema Shah, chief global strategist at Principal Asset Management. Tariffs naturally consist of a price increase for any importer, as they must pay a duty on goods entering the U.S. But questions still remain on who will bear the cost of that price increase. Will importers succeed in foisting it on foreign suppliers? Will they pass the cost along to consumers? There's also the fact that the tariff policies themselves remain mostly in flux. The exact rates that will be applied to individual countries and specific categories of goods—copper, automobile, pharmaceuticals—is not yet clear. 'Part of those tariffs will be absorbed by the importers, by the wholesalers, the transportation companies, advertisers, and retailers, with exact amounts also depending on the elasticities of demand for those products,' wrote William Blair U.S. macro analyst Richard de Chazal. Many companies also front-loaded their inventories earlier this year to avoid tariffs they sensed were coming. Those stockpiles are only now starting to dwindle. Once they're depleted, companies won't have a choice but to purchase tariffed goods, inevitably raising their costs. In Tuesday's report, price levels for certain consumer essentials rose: Apparel prices were up 0.4% through June after having declined 0.4% the previous month. The household furnishings and operations category, which includes all the goods and services used for maintaining a home, such as furniture, appliances, cleaning products, and domestic services, rose 1.0% in June after being up 0.3% in May. Prices for leisure activities also rose in June. The recreation index, which the BLS uses to track all prices for a basket of goods and services related to people's hobbies and entertainment activities like television sets, expenses for pets, and tickets for live events, rose 0.4%. The increase in those categories indicates 'import levies are slowly filtering through to core goods prices,' Shah said. This story was originally featured on Sign in to access your portfolio
Yahoo
6 hours ago
- Business
- Yahoo
Morning Bid: Tariff imprint spied in US CPI
A look at the day ahead in European and global markets from Kevin Buckland The investing world will be watching U.S. factory inflation on Wednesday, after consumer price data pulled Wall Street back from all-time highs overnight, with Fed predictions of tariff-induced inflationary effects starting to be realized. Both the S&P 500 and Nasdaq - and by extension, MSCI's world equities index - retreated from record peaks after traders shaved back bets of U.S. rate cuts this year as prices rose for things such as coffee and couches, while staying steady for tariff-exempted (for now) items such as cars. That swung the spotlight squarely onto producer price data due later today, which could reveal an even bigger building of price pressures, because businesses may still be holding back on passing higher costs to consumers. This validates Fed Chair Jay Powell's repeated assertion that an expected emergence of tariff-led inflation uptick this summer is cause to hold off on further interest rate cuts for now. Traders were listening, trimming back bets to 43 basis points of cuts over the rest of the year, from closer to 50 basis points earlier in the week. President Donald Trump's reading of the data was different though, as he took to his Truth Social platform to post, "Consumer Prices LOW. Bring down the Fed Rate, NOW!!!" Trump has repeatedly railed against the Fed for not cutting rates, even calling for Powell's resignation, which has fuelled concerns that the U.S. President aims to put the Fed under his thumb. Powell's tenure ends in May next year, but he has a seat on the Board of Governors until January 2028. Trump said Tuesday that Treasury Secretary Scott Bessent could be a candidate to replace Powell, but "because I like the job he's doing" currently, he may not end up as a contender. Bessent, meanwhile, said in an interview on Bloomberg Surveillance that a "formal process" is already starting to identify the next Fed Chair. As if that wasn't enough to keep investors busy, the U.S. earnings season has also just gotten underway. JPMorgan Chase and Citigroup beat expectations on Tuesday, but were met with a mixed market response. Bank earnings due Wednesday include Goldman Sachs, Morgan Stanley and Bank of America, while Johnson & Johnson will give more of a snapshot of how consumers are faring. The corporate calendar by contrast is relatively quiet in Europe, where stock futures are pointing to a mixed open, and Britain's FTSE reopens after hitting an all-time peak on Tuesday only to then end the day down 0.7%, its biggest fall since post-"Liberation Day" tariff turmoil in early April. The main event will be UK consumer price data, with the consensus among economists for headline inflation to hold steady at 3.4%. Bank of England policymaker Catherine Mann said on Tuesday that inflation pressures remained a challenge despite a fall in the pace of pay growth in recent months. Key developments that could influence markets on Wednesday: - UK consumer price index (CPI) for June. - U.S. earnings: Morgan Stanley, Goldman Sachs, Bank of America, Johnson & Johnson. - U.S. industrial production, producer price index (PPI). - U.S. Federal Reserve officials speaking, including Governor Michael Barr. Trying to keep up with the latest tariff news? Our new daily news digest offers a rundown of the top market-moving headlines impacting global trade. Sign up for Tariff Watch here.
Yahoo
6 hours ago
- Business
- Yahoo
Morning Bid: Tariff imprint spied in US CPI
A look at the day ahead in European and global markets from Kevin Buckland The investing world will be watching U.S. factory inflation on Wednesday, after consumer price data pulled Wall Street back from all-time highs overnight, with Fed predictions of tariff-induced inflationary effects starting to be realized. Both the S&P 500 and Nasdaq - and by extension, MSCI's world equities index - retreated from record peaks after traders shaved back bets of U.S. rate cuts this year as prices rose for things such as coffee and couches, while staying steady for tariff-exempted (for now) items such as cars. That swung the spotlight squarely onto producer price data due later today, which could reveal an even bigger building of price pressures, because businesses may still be holding back on passing higher costs to consumers. This validates Fed Chair Jay Powell's repeated assertion that an expected emergence of tariff-led inflation uptick this summer is cause to hold off on further interest rate cuts for now. Traders were listening, trimming back bets to 43 basis points of cuts over the rest of the year, from closer to 50 basis points earlier in the week. President Donald Trump's reading of the data was different though, as he took to his Truth Social platform to post, "Consumer Prices LOW. Bring down the Fed Rate, NOW!!!" Trump has repeatedly railed against the Fed for not cutting rates, even calling for Powell's resignation, which has fuelled concerns that the U.S. President aims to put the Fed under his thumb. Powell's tenure ends in May next year, but he has a seat on the Board of Governors until January 2028. Trump said Tuesday that Treasury Secretary Scott Bessent could be a candidate to replace Powell, but "because I like the job he's doing" currently, he may not end up as a contender. Bessent, meanwhile, said in an interview on Bloomberg Surveillance that a "formal process" is already starting to identify the next Fed Chair. As if that wasn't enough to keep investors busy, the U.S. earnings season has also just gotten underway. JPMorgan Chase and Citigroup beat expectations on Tuesday, but were met with a mixed market response. Bank earnings due Wednesday include Goldman Sachs, Morgan Stanley and Bank of America, while Johnson & Johnson will give more of a snapshot of how consumers are faring. The corporate calendar by contrast is relatively quiet in Europe, where stock futures are pointing to a mixed open, and Britain's FTSE reopens after hitting an all-time peak on Tuesday only to then end the day down 0.7%, its biggest fall since post-"Liberation Day" tariff turmoil in early April. The main event will be UK consumer price data, with the consensus among economists for headline inflation to hold steady at 3.4%. Bank of England policymaker Catherine Mann said on Tuesday that inflation pressures remained a challenge despite a fall in the pace of pay growth in recent months. Key developments that could influence markets on Wednesday: - UK consumer price index (CPI) for June. - U.S. earnings: Morgan Stanley, Goldman Sachs, Bank of America, Johnson & Johnson. - U.S. industrial production, producer price index (PPI). - U.S. Federal Reserve officials speaking, including Governor Michael Barr. Trying to keep up with the latest tariff news? Our new daily news digest offers a rundown of the top market-moving headlines impacting global trade. Sign up for Tariff Watch here. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
8 hours ago
- Business
- Yahoo
Morning Bid: Tariff imprint spied in US CPI
A look at the day ahead in European and global markets from Kevin Buckland The investing world will be watching U.S. factory inflation on Wednesday, after consumer price data pulled Wall Street back from all-time highs overnight, with Fed predictions of tariff-induced inflationary effects starting to be realized. Both the S&P 500 and Nasdaq - and by extension, MSCI's world equities index - retreated from record peaks after traders shaved back bets of U.S. rate cuts this year as prices rose for things such as coffee and couches, while staying steady for tariff-exempted (for now) items such as cars. That swung the spotlight squarely onto producer price data due later today, which could reveal an even bigger building of price pressures, because businesses may still be holding back on passing higher costs to consumers. This validates Fed Chair Jay Powell's repeated assertion that an expected emergence of tariff-led inflation uptick this summer is cause to hold off on further interest rate cuts for now. Traders were listening, trimming back bets to 43 basis points of cuts over the rest of the year, from closer to 50 basis points earlier in the week. President Donald Trump's reading of the data was different though, as he took to his Truth Social platform to post, "Consumer Prices LOW. Bring down the Fed Rate, NOW!!!" Trump has repeatedly railed against the Fed for not cutting rates, even calling for Powell's resignation, which has fuelled concerns that the U.S. President aims to put the Fed under his thumb. Powell's tenure ends in May next year, but he has a seat on the Board of Governors until January 2028. Trump said Tuesday that Treasury Secretary Scott Bessent could be a candidate to replace Powell, but "because I like the job he's doing" currently, he may not end up as a contender. Bessent, meanwhile, said in an interview on Bloomberg Surveillance that a "formal process" is already starting to identify the next Fed Chair. As if that wasn't enough to keep investors busy, the U.S. earnings season has also just gotten underway. JPMorgan Chase and Citigroup beat expectations on Tuesday, but were met with a mixed market response. Bank earnings due Wednesday include Goldman Sachs, Morgan Stanley and Bank of America, while Johnson & Johnson will give more of a snapshot of how consumers are faring. The corporate calendar by contrast is relatively quiet in Europe, where stock futures are pointing to a mixed open, and Britain's FTSE reopens after hitting an all-time peak on Tuesday only to then end the day down 0.7%, its biggest fall since post-"Liberation Day" tariff turmoil in early April. The main event will be UK consumer price data, with the consensus among economists for headline inflation to hold steady at 3.4%. Bank of England policymaker Catherine Mann said on Tuesday that inflation pressures remained a challenge despite a fall in the pace of pay growth in recent months. Key developments that could influence markets on Wednesday: - UK consumer price index (CPI) for June. - U.S. earnings: Morgan Stanley, Goldman Sachs, Bank of America, Johnson & Johnson. - U.S. industrial production, producer price index (PPI). - U.S. Federal Reserve officials speaking, including Governor Michael Barr. Trying to keep up with the latest tariff news? Our new daily news digest offers a rundown of the top market-moving headlines impacting global trade. Sign up for Tariff Watch here.
CBC
11 hours ago
- Business
- CBC
Rising clothing, vehicle prices drive inflation increase
Canada's inflation rate rose to 1.9 per cent in June, driven largely by higher prices on clothing and vehicles. The higher consumer costs are in part because of uncertainty created by U.S. tariff threats.
