Higher tariffs on imports into the US have not yet had much impact on domestic inflation: import price inflation excluding food & energy was muted at 1% year-on-year both in May and June despite April’s ‘Liberation Day’ spree of protectionist levies. To date, importers have absorbed most of the tariffs while waiting for the definitive rates to be negotiated. However, core consumer price inflation excluding transportation did show signs of tariff pass-through, rising by 2.2% YoY in June after 1.8% in May and 1.7% in April. As tariff levels are finalised after 1 August – President Trump’s self-imposed deadline – the impact will start trickling down – first into goods prices and then into services prices. Inflation will rise as a result.
