U.S. consumer prices increased in June, potentially signaling the emergence of long-anticipated tariff-driven inflation and prompting the Federal Reserve to maintain caution regarding interest rate cuts.

The Bureau of Labor Statistics reported Tuesday that the Consumer Price Index (CPI) advanced 0.3% last month, following a modest 0.1% gain in May. This represented the largest monthly increase since January. Over the 12 months ending in June, the CPI rose 2.7%, up from 2.4% in May.

Economists surveyed had projected a 0.3% monthly rise and a 2.6% year-over-year increase.

Market Reaction: Stocks: U.S. stock index futures extended gains after the CPI release. Bonds: Treasury yields trimmed declines, with the 10-year yield holding steady. Forex: The U.S. dollar rose against the Japanese yen.

Comments:

Brian Jacobsen, Chief Economist at Annex Wealth Management in Menomonee Falls, Wisconsin: "Tariff impacts appear in the data but prove less disruptive than feared. Appliance and household goods prices jumped nearly 2%, though these categories comprise just 1% of CPI. Services—dominant in consumption baskets—show scant inflation acceleration signs. Rents edged up 0.2% while lodging away from home plunged 2.9%. Tariffs matter, yet their inflationary effect appears more muted and less mechanically transmitted than anticipated."

Peter Cardillo, Chief Market Economist at Spartan Capital Securities in New York: "Essentially positive news—core inflation's 0.2% monthly rise matched forecasts, though annual figures slightly exceeded expectations. We observe initial tariff-related inflation signals emerging in aggregate data. While inflation runs hotter than projected, not all developments are negative. Faint indications suggest tariff-induced pressures are materializing. This report affords the Fed breathing room to pause in July, requiring August data for September decisions."

Chris Zaccarelli, Chief Investment Officer at North Light Asset Management in Charlotte, North Carolina: "Traders closely monitored this CPI release, but the Fed likely scrutinized it more intensely amid internal rate-cut debates. Fortunately, core data—excluding food and energy—showed controlled inflation: monthly growth undershot projections while annual increases matched the 2.9% consensus. Should inflation remain contained, the Fed could initiate cuts as early as September. Divergent subsequent reports, however, would prolong the status quo."