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US inflation climbed to 2.7 per cent in June, surpassing expectations and signalling that Donald Trump’s tariffs are hitting prices.
Tuesday’s annual consumer price index figure was up from 2.4 per cent in May and above expectations of 2.6 per cent among analysts surveyed by Bloomberg.
The data from the Bureau of Labor Statistics comes as the US president ratchets up his tariff war with Washington’s trading partners, threatening to impose large levies on importers from next month if they do not reach trade deals.
Trump has announced a host of tariffs since returning to office, setting a baseline rate of 10 per cent and introducing an array of sector-specific levies. He has delayed the introduction of steeper reciprocal tariffs, previously due to take effect last week, until August 1.
Annual core inflation, which strips out food and energy prices, rose by 2.9 per cent, in line with expectations.
US Treasury yields dipped as investors added to bets on interest rate cuts this year, while stock market futures rose.
The president is piling pressure on US Federal Reserve chair Jay Powell to reduce interest rates by as much as 3 points. Most members of the Fed’s rate-setting committee have indicated they want to hold off on any reduction until the inflationary impact of tariffs becomes clear.
But two members had indicated they would be open to a cut as soon as this month.
This is a developing story
