An inflation report to be released on Tuesday will mark the latest test for President Donald Trump’s tariff policy, which so far has averted the resurgence of inflation that many economists expected.
Instead, inflation has cooled, defying doomsday predictions and helping to propel sturdy economic performance.
Economists expect inflation to have risen 2.7% over the year ending in June, which would mark a notable acceleration from 2.4% annual inflation recorded in the previous month.
Still, the anticipated reading would clock in below an inflation rate of 3% recorded in January, the month Trump took office.
Oil prices have dropped 15% since Trump took office, bringing down the price of auto gasoline. Even a blistering surge in egg prices has slowed. The price of eggs climbed 41% over the year ending in May, which marks a reduction from 53% inflation recorded in January.
Speaking at the White House on Monday, Trump touted the reduction of inflation so far this year.
“The economy is roaring, business confidence is soaring, incomes are up, prices are down and inflation is dead,” Trump said. “It’s dead.”
While inflation has eased, price increases have persisted at a higher rate than the Federal Reserve’s target level of 2%.
Some analysts expect price increases to accelerate over the coming months as tariffs take hold, though they acknowledged that the path forward remains unclear amid Trump’s fluctuating policy.
Typically, importers pass along a share of the tariff-related tax burden in the form of higher costs for shoppers. A host of major retailers, including Walmart and Best Buy, has warned about potential price hikes as a result of Trump’s levies.
The Federal Reserve issued a forecast last month indicating the central bank expects a rekindling of inflation.
The personal consumption expenditures index, a measure of inflation preferred by the Fed, will rise from 2.1% to 3% over the remainder of 2025, the central bank predicted. That forecast marked higher inflation expectations than the central bank had issued in March.
President Donald Trump speaks to the press as he arrives at the White House in Washington, D.C., on July 13, 2025.
Annabelle Gordon/Reuters
So far this year, the Fed has opted to hold interest rates steady as policymakers assess the potential impact of tariffs.
Speaking at a press conference in Washington, D.C., last month, Powell said tariffs would likely “push up prices and weigh on economic activity” over the course of this year. But, he added, the effects would depend on the “ultimate level” of tariffs, which have frequently shifted.
National Economic Council Director Kevin Hassett, a top economic advisor to Trump, on Monday rebuked concerns about tariff-related inflation. The Fed, Hassett told CNBC, has been “very, very wrong” in its assessment of a potential resurgence of price increases.
The posture of restraint at the Fed in recent months has elicited sharp and repeated criticism from Trump.
“We have a man who just refuses to lower the Fed rate,” Trump told reporters last month. “Maybe I should go to the Fed. Am I allowed to appoint myself? I’d do a much better job than these people.”
The president is legally barred from appointing himself head of the Fed, an independent federal agency.
The Fed is set to hold its next meeting on July 29 and 30. Investors peg the chances of a decision to leave rates unchanged at 95%, according to the CME FedWatch Tool, a measure of market sentiment.
