Inflation is back in the spotlight in the United States, and this time, it’s a full cast of big names — from Donald Trump and OPEC+ to Jerome Powell, the Federal Reserve, and even Wall Street. Everyone seems to have a part in the story. And the spark that set it all off? U.S. trade policy, which continues to hit consumers where it hurts most — their wallets.
According to the latest numbers from the U.S. Bureau of Labor Statistics, the Consumer Price Index (CPI) made an unexpected jump — and now, everyone’s watching to see what the Fed will do next. With all the global economic tensions and changes happening around the world, one thing’s clear: things are shifting fast, and American families are already feeling it every time they go shopping. So, let’s take a closer look at what’s going on.
What’s happening with inflation in the U.S.?
In June, prices went up again, and inflation hit 2.7%. Because of this, many people are getting worried about the economy’s future. Before this, prices stayed pretty steady and jobs were growing. Now, the effects of earlier decisions are starting to show. You can see this in the Consumer Price Index (CPI), which measures how much prices for everyday things are going up.
Why is the 2.7% figure important?
The inflation target of the Federal Reserve (the Fed), the central bank of the United States, is to keep it around 2%. That target is part of its so-called “dual mandate,” which consists of ensuring price stability and promoting employment. When inflation rises above that level, it can jeopardize that stability. For that reason, inflation at 2.7% is concerning: it is well above the official target, and in addition,the core inflation figure (which excludes food and energy due to their volatility) was even higher: 2.9%.
It’s also important to highlight that inflation has surprised financial markets. Analysts were expecting an increase, but not such a pronounced one. Despite this, the final figure was slightly lower than they had forecasted (a 2.9% general increase was expected, but it turned out to be 2.7%), which gives a slight positive sign within a complicated outlook.
Which products are rising the most?
The products hit hardest by this inflation are those most exposed to the trade war—like clothing, which saw a staggering 14.2% increase in just one month. Prices also went up when excluding food and energy, showing that the rise isn’t just about isolated factors but part of a broader trend.
On the flip side, energy and natural gas prices have actually fallen the most, which is quite unusual. This puts the U.S. on a different path from Europe, where rising energy costs are driving inflation higher in countries like Spain.
Comparison with Europe
While in the U.S. energy prices have moderated — in part due to increased oil production by countries grouped in OPEC+ — the opposite has happened in the Eurozone. In Spain, for example, inflation rose to 2.3% during the same period, driven by increases in energy and food prices.
What does this mean for the future?
We don’t know for sure what’s going to happen in the future, but there’s a general concern: the increase in inflation, especially caused by past political decisions such as Trump’s trade war, puts economic stability at risk and complicates the Fed’s job of trying to control inflation without slowing economic growth too much.
If prices continue to climb, this spike in inflation could end up forcing policymakers to roll out tougher economic measures in the near future. That kind of response could ripple through the economy, hitting both everyday consumers and the financial markets alike.