Trump’s Tariffs Lead To Inflation Uptick In August
Inflation was up in August as tariffs put pressure on prices for consumer goods like clothing, furniture, and coffee.
The consumer price index (CPI) was up 2.9% in August from a year earlier, according to a new report from the Bureau of Labor Statistics, released on Thursday.
As economics reporter Heather Long put it: “The middle-class squeeze from tariffs is here.”
A LOOK AT THE NUMBERS
The CPI for August is an increase from 2.7% in July and the fastest annual pace of inflation since the beginning of 2025. The CPI measures the cost of consumer goods, including housing (up nearly 4% from last year), medical care (up 3.4%), and grocery prices (up 2.7%).
Some consumer products that are mostly sourced abroad – like coffee, which rose more than 20% from a year ago – have seen particularly high year-over-year price surges.
Economists say President Trump’s tariffs have forced businesses raise prices on certain products, while recovering tourist traffic — which was down over the spring and early summer during Trump's crackdown on immigration and amid tariff boycotts — has also driven up inflation.
Up next: The inflation report presents a conflict for the Federal Reserve, which was expected to cut interest rates at its upcoming September meeting amid months of weak jobs reports.
Last week’s poor jobs report has economists expecting the Fed will still cut rates, though that risks keeping inflation elevated.
High inflation typically means the Fed will raise rates; weak jobs reports would indicate they’d lower rates. The Fed is fighting both things. We wish Jerome Powell good luck.