U.S. inflation climbed to 2.9% this month compared to a year ago, reflecting rising prices as tariffs intensified. Economists had expected this increase, signaling continued pressure on consumer costs.
Prices accelerated from the previous month’s 2.7% rate. Although still below the 3% recorded earlier, the rise highlights ongoing inflation concerns. Meanwhile, the Federal Reserve prepares to decide on a widely expected interest rate cut. Policymakers must weigh higher prices against slower economic growth.
Housing costs contributed the most to the price increase, rising 0.4%. Food prices increased 0.5%, while energy costs climbed 0.7%. Egg prices remained flat monthly but are nearly 11% higher than last year. Coffee prices surged 20% over the year.
Monthly inflation rose 0.4% from the previous month, marking the largest monthly increase since December. Analysts noted that tariffs contributed modestly, but the overall rise stems primarily from housing and food costs. Consequently, the data presents challenges for the Federal Reserve.
Recent employment figures also show the U.S. job market slowing. Hiring decreased sharply, and revised data indicated weaker job gains last year and earlier this year than previously estimated. Weekly unemployment claims rose, suggesting layoffs may be increasing.
The combination of rising inflation and weaker hiring creates stagflation risks. The Fed faces a difficult decision: raising interest rates could slow the economy further, while cutting rates could boost spending and worsen inflation. Investors currently expect about a 90% chance of a quarter-point rate cut and a 9% chance of a half-point cut.
The inflation report comes after President Trump dismissed Bureau of Labor Statistics Commissioner Erika McEntarfer. Trump claimed, without evidence, that McEntarfer manipulated data for political reasons. Former BLS Commissioner William Beach criticized the firing, calling it groundless and a dangerous precedent.
McEntarfer had served in the federal government for two decades and thanked her staff publicly, emphasizing the importance of their work. The dismissal has sparked debates about the independence of statistical agencies and the credibility of economic data.
Overall, U.S. inflation continues to rise, influenced by tariffs, housing, and food costs. At the same time, weaker labor data challenges policymakers. Investors and consumers alike must monitor upcoming Federal Reserve decisions.
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