Inflation picked up last month as Trump’s tariffs start to impact prices — here’s what might feel most expensive

Inflation heated up last month, suggesting that businesses may now be starting to pass along higher costs from tariffs onto the prices that you see on store shelves.

Consumer prices rose 0.3 percent between May and June, the fastest pace since January, according to the Bureau of Labor Statistics (BLS)’ latest monthly consumer price index (CPI) report. Excluding food and energy, a measure of “core” or “underlying” inflation rose 0.2 percent, the most since April. Many items exposed to tariffs — from household furnishings and furniture to appliances and toys — rose the most in years.

More price hikes could also still be coming down the pipeline. The majority of economists (41 percent) expect inflation to stay elevated through 2027, primarily driven by higher import taxes, according to Bankrate’s latest Economic Indicator Survey. Meanwhile, Fed officials have said that uncertainty over how tariffs could impact inflation is the main reason rate cuts are on hold.

A little bit of inflation is good for consumers. The economy keeps growing and businesses continue expanding, hiring workers and bumping up their pay along the way. Too much inflation, however, feels akin to taking a pay cut. High inflation has consequences beyond just affordability, complicating saving for emergencies or investing for retirement.

Since the pandemic, consumer prices are 24 percent more expensive, a Bankrate analysis of Bureau of Labor Statistics data shows. That price burst means Americans need about $1,240 to buy the same goods and services that cost $1,000 when the coronavirus-induced recession occurred.

Looking for the latest information on consumer prices? Here’s a round-up of where inflation is improving — and where it’s still remaining stubborn.

Highlights of the latest statistics on inflation

What is the current inflation rate?

Over the past 12 months, the overall annual inflation rate in June hit 2.7 percent, the BLS’ CPI report showed. Excluding food and energy, “core” prices rose 2.9 percent from a year ago.

Inflation is well below where it peaked in the summer of 2022. Yet, the figures reflect bumpier progress on inflation’s path back to the Fed’s 2 percent target. Inflation was staying stubbornly above the Fed’s goalpost even before President Donald Trump lifted tariffs to the highest since the Great Depression.

Prices that are rising the most

Of the nearly 400 items that BLS tracks, almost 7 in 10 items (or 72 percent) increased in price between June 2024 and June 2025. Less than a third (or 27 percent) were cheaper in June than they were a year ago.

According to BLS, these are the prices that increased most over the past year:

Month-over-month price changes, however, can give consumers a more real-time look at the prices that have recently been popping. Lower prices in the same year-ago period, for example, can cause an item to look like it’s gaining speed, when it’s slowing in reality.

Case in point: Back in May 2024, energy prices rose 3.5 percent over the 12-month period, appearing to be gaining speed from April’s 2.5 percent annual increase despite dipping 2 percent over the month. The reason for the discrepancy? May 2023 was a cheaper month for energy costs.

Consumers, however, should take seasonal variations into account. For instance, tax season likely contributed to a jump in tax return preparation services costs in March. BLS doesn’t seasonally adjust all of its items, and year-over-year inflation rates can better smooth out those variations.

According to BLS, these are the prices that increased most over the past month:

Why is inflation still hot right now?

Consumers might notice just how much more expensive egg prices are from a year ago and wonder why the overall inflation rate is just 2.7 percent. To put it simply, the Bureau of Labor Statistics assigns weights to each individual good or service it tracks, based on how prevalent it’s considered to be in a consumer’s monthly budget.

Over the past year:

• Shelter has accounted for roughly half (50 percent) of the increase in inflation;
• Food has accounted for 15 percent of inflation; and
• Car insurance has accounted for 6 percent of inflation.

Excluding food, shelter and energy, inflation would’ve risen just 1.7 percent.

Yet, in a sign that tariffs are contributing to the recent increase in inflation, goods prices accounted for more than a third (or 38 percent) of overall inflation between May and June — after accounting for just 18 percent of monthly inflation back in February.

The drivers of inflation have changed dramatically since the initial post-pandemic price burst. When price pressures peaked in June 2022, shelter contributed to just 20 percent of the annual increase in prices. But as consumers emerged from lockdowns with massive pent-up demand at the same time as global supply shortages, goods prices were driving the majority of price pressures, accounting for more than half (58 percent) of inflation between June 2021 and 2022. Energy was also responsible for about a third (32 percent) of inflation.

To combat inflation, officials on the Federal Reserve lifted borrowing costs from a rock-bottom level of near-zero percent to a 23-year high of 5.25-5.5 percent. Now, borrowing costs are in a target range of 4.25-4.5 percent.

Post-pandemic inflation: What’s risen the most and what’s gotten cheaper

Of the nearly 400 items BLS tracks, just 24 (or roughly 6 percent) are cheaper today than they were pre-pandemic.

To be sure, prices are expected to rise in the healthiest of economies — though only gradually, at a goalpost of around 2 percent a year.

According to BLS, these are the top 10 items that have jumped the most in price since the pandemic:

Meanwhile, the items that have dropped in price the most since the pandemic are primarily goods and electronics — largely thanks to improving supply chains.

Inflation breakdown by product category

Looking for an easy analysis of how inflation is impacting the key items in your budget? Here’s what Bankrate found.

• Gas

• Food

• Rent

• Vacations

• Car ownership

The different methods of measuring inflation: PCE versus CPI

Fed policymakers look at the full picture of economic data when setting interest rates. But officially, they prefer a different measure to see whether they’re succeeding at controlling inflation: the Department of Commerce’s personal consumption expenditures (PCE) index.

Lately, the PCE index has been indicating slower inflation, with overall prices now half a percentage point above the Fed’s target (2.3 percent as of May 2025, versus 2.4 percent in the same month for CPI). Excluding food and energy, “core” prices in May are up 2.7 percent from a year ago versus 2.8 percent in BLS’ gauge that month.

Those variations have always been afoot. Mainly, they’re because of methodology differences. For starters, PCE takes consumers’ substitutions into account (for example, one family’s decision to buy fish over meat for one month because it’s cheaper).

But another key difference is to blame lately. Both agencies estimate an item’s relative importance differently, with BLS’ gauge giving the most weight to the category of inflation that’s coincidentally been the hottest: shelter.

For Fed officials, the story remains largely the same: Inflation has majorly improved since peaking at a 40-year high back in 2022 but is still stubborn.

Takeaways for consumers

Slowing inflation in 2024 gave the Fed room to cut interest rates and consumers a chance to recover some of the purchasing power that they lost. Even so, prices are still higher today than they would’ve been had the pandemic not occurred, and the Fed remains worried that tariffs could reignite inflation.

• So long as inflation stays high, so will the borrowing costs you pay: The U.S. central bank’s key benchmark interest rate is still higher than at any point since the Great Recession — keeping borrowing costs elevated on the products consumers pay, from credit cards and auto loans to home equity lines of credit (HELOCs).
• Comparison shop as much as you can: Consumers know to compare offers from multiple lenders before locking in a loan. Why not the same for the items you buy on a regular basis? Compare prices at multiple retailers, see if any stores offer price match and craft a budget. If a product or ingredient pushes your spending goal over the edge, consider swapping it out for something else.
• Use the personal finance tools at your disposal: Finding the right credit card that helps you earn rewards on the purchases you were already going to make can be another way to pad up your wallet. Just be sure you’re not carrying a balance. A 20 percent interest rate will never outweigh the cash back.
• Save for emergencies and find the right account: Historically, investing in the stock market has been the best way to beat inflation over time, but higher rates mean savers can find a market-like return without any of the risk. Deposit rates have already fallen after the Fed’s rate cuts, but returns on high-yielding accounts are still beating inflation. Stash your cash in a high-yield account or add a certificate of deposit (CD) to your portfolio, so you can lock in these elevated yields for the long haul.

See how all items BLS regularly tracks have changed over time

• Methodology