The trend: Inflation ticked higher in June as the impact of tariffs began to reach consumers.

• The personal consumption expenditures (PCE) price index—the Fed’s preferred inflation gauge—rose 2.6% YoY, slightly above the 2.5% analysts expected and up from 2.4% in May, marking the highest level since February, per the US Commerce Department. On a monthly basis, it climbed 0.3%, in line with forecasts.
• Core PCE, which excludes volatile food and energy items, increased 2.8% YoY, ahead of the 2.7% analysts expected, and 0.3% MoM, in line with expectations.

What’s driving the gains: While the acceleration from May was modest, the categories fueling the increase point to a broader challenge as many of the steepest price jumps occurred in categories significantly affected by tariffs:

• Furnishings and durable household equipment surged 1.3% MoM, the biggest gain since March 2022.
• Recreational goods and vehicles rose 0.9%, the most since February.
• Apparel and footwear increased 0.4%.

Together, the data suggest that near-universal import duties are no longer just squeezing companies’ margins; they’re beginning to drive up sticker prices.

The ripple effects: Tariffs and the broader uncertainty they generate are contributing to a wave of job cuts.

• So far this year, companies have announced 806,383 layoffs—the highest seven-month total total since 2020 and 75% higher than the 460,530 cuts over the same period last year, per Challenger, Gray & Christmas.
• Layoffs are already 6% above the full-year total in 2024.

Our take: Inflation remains the top economic concern for US consumers and pressure is building. Companies ranging from Procter & Gamble and Kraft Heinz to Mattel, Stanley Black & Decker, and Walmart have all signaled plans to raise prices. With many households already tightening their budgets, even modest hikes could spur further pullbacks in spending, making an already tough retail environment even harder to navigate.