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The Consumer Price Index in June rose 2.7% on an annual basis, a sign inflation around the U.S. is creeping up after declining earlier this year.
The CPI was forecast to rise 2.7% last month, higher than last month's rate of 2.4%, according to economists polled by financial data firm FactSet. June's reading is the highest since February, when the CPI rose 2.8% on an annual basis.
On a month-over-month basis, the CPI rose 0.3%, which is the largest increase since January and in line with economists' forecasts.
The CPI, a basket of goods and services typically bought by consumers, tracks the change in those prices over time.
So-called core inflation, a measure of CPI that excludes (which are more volatile), rose by 2.9% over the past 12 months, according to the Bureau of Labor Statistics. That's slightly below the 3% predicted by economists polled by FactSet.
Food prices rose 3% on an annual basis last month, higher than the overall inflation rate. Items that have seen big cost increases since last June include eggs, which are up 27.3%, roasted coffee, which is up over 12.7%, and ground beef, which is up 10.3%.
Adam Crisafulli, head of investment adviser Vital Knowledge, said in a report that certain categories exposed to tariffs — ranging from apparel, home furnishings and appliances to footwear and toys — saw some upward pricing pressure. But other products vulnerable to higher levies, such as vehicles, remained stable.
EY-Parthenon Chief Economist Gregory Daco estimates that roughly a third of the June rise in the CPI is attributable to higher tariffs.
The muted CPI data from previous months indicates that companies have taken steps to , largely shielding consumers from price shocks. However, that could change.
"Strategies used by companies to avoid passing on cost increases to consumers are not eternal," Daco noted a report.
Despite the June increase, Wall Street analysts say inflation mostly remains in check.
"While today's CPI release showed some early signs of tariff impact, on the whole underlying inflation remained muted," said Kay Haigh, global co-head of fixed income and liquidity solutions in Goldman Sachs Asset Management. "Price pressures, however, are expected to strengthen over the summer and the July and August CPI reports will be important hurdles to clear."
Analysts say the latest inflation data points to the Federal Reserve standing pat on interest rates at its meeting later this month. Investors see a more than 97% probability that the Fed will keep the federal funds rate in its current range of 4.25% to 4.5% when officials meet on July 29-30, according to The CME Group's FedWatch .
"Today's inflation report all but dashes any remaining hopes that the Fed may cut interest rates at its meeting later this month," said eToro U.S. investment analyst Bret Kenwell in an email. "However, if subsequent inflation readings reiterate the rise in inflation, it could jeopardize future rate cuts as well."
