CPI rose in June by 2.7% on an annual basis. Here’s what that means.

The Consumer Price Index in July rose 2.7% on an annual basis, slightly cooler than economists had forecast.

By the numbers

The CPI was expected to rise 2.8% last month, according to economists polled by financial data firm FactSet. 

The CPI, a basket of goods and services typically bought by consumers, tracks the change in prices on everyday items such as food and apparel over time. So far this year, inflation has stayed at 3% or lower. June’s CPI reading was 2.7%.

What the experts say about the impact of tariffs

Economists have been watching closely to determine how tariffs might trickle through to the CPI data. For the first several months of the year, the impact appeared to be limited, but June’s reading indicated that the levies might be starting to drive up prices in certain categories such as apparel, home furnishings and appliances.

Goods from more than 60 countries and the European Union are now subject to a new round of reciprocal tariffs that went into effect on Aug. 7.

During a call with media yesterday, Alan Detmeister, an economist at UBS, said the investment bank expects consumers will start to see the direct effects of the tariffs this year or into early next year. 

“It’s possible that these tariff-induced price increases are a one-time price level shock that will start coming down early next year,” said Detmeister. “We think they’re going to be much more lasting.”