Price Inflation Rose in June to a Five Month High—But Don’t Blame Tariffs
Price inflation is moving up again, in spite of President Trump’s repeated (and false) claims that prices are falling. The media isn’t right either, though, since much of the media consensus about June’s stubbornly high price inflation trend is that it was caused by tariffs. Tariffs however, are not inflationary. The price inflation we now see is the continued legacy of the monetary inflation of Trump-Biden efforts to embrace huge deficits and pressure the Federal Reserve to push interest rates downward with easy-money policies.
According to the latest price inflation data from the Bureau of Labor Statistics, the consumer price index rose 2.7 percent year over year, and 0.3 percent month over month. That’s the largest year-over-year increase in four months, and the largest month-to-month increase since January 2025. June’s CPI increase also places CPI growth above of CPI growth rates experienced during September of last year. At that time, Fed Chairman Jerome Powell had declared that price inflation was rapidly moving back toward the Fed’s two-percent target. Nine months later, we can see the Fed’s forecasters were clearly wrong, as the CPI has increased by 2.1 percent in that period.
We find a similar trend if we look at so-called “core CPI” which removes volatile food and energy prices. Core CPI also hit a four-month high in June, measured year-over year. Measured month-to-month, core CPI hit a five month high in June.
Put into larger perspective, we find that ongoing price inflation continues to ensure that real wages have stagnated for years. For example, since January 2021, average hourly earnings have increased by 21 percent. During that same period, however, CPI inflation has increased by nearly 22 and a half percent. Put another way, the average hourly earnings increased from $29.92 from January 2021 to $36.30 in June 2025. In real, inflation-adjusted terms, however, average hourly earnings fell from $29.92 to $29.65 during that same period. Wages simply have not been keeping up with price increases.
In its comments on June’s CPI report, however, the Trump White House stated in a press release that “prices for everyday Americans continue to fall” and crows that core inflation “beat expectations.” First of all, “beating expectations” does not mean price inflation has improved. To “beat expectation” means simply to come in slightly less bad than what forecasters who were expecting. “Beating expectation” is something that investors follow, but the concept is irrelevant to the real economy. Moreover, it is absolutely not the case that prices “continue to fall” as the White House claims. Naturally, the White House public relations worker
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