“Inflation is very much back in the ranks of top-tier data as investors, who have grown largely indifferent to tariff rhetoric, scan for evidence of its fingerprints in the macro and the June CPI print was arguably the first print where those fingerprints were fairly visible. Despite the downside surprise on the core print, the fifth consecutive downside surprise, core goods inflation jumped notably in the report from modest deflation in the May release to a nearly 20 basis point increase in June, led by the most tariff-sensitive line items. Stripping out auto prices, which deflated in June, in large part thanks to the pull forward of demand to frontrun tariffs, core goods rose 3.9% in annualized terms, good for the fastest pace since February 2023. And while June was the first month when tariff effects really shined through in the report, the trend change has been notable for several months now. Aggregating the most tariff-sensitive categories of consumer electronics, furniture, appliances, toys, apparel, sporting goods, and other household equipment and furnishings reveals a notable deviation from the trend of disinflation we’ve witnessed in those goods for the past few years, starting in February and accelerating in recent months.”
Morten W. Langer
