Tariff impacts are quietly intensifying—steadily climbing import prices coupled with cost pass-throughs in specific sectors are planting seeds of inflation. JPMorgan Chase warns that as tariff pressures spread across broader product categories, price pressures will escalate further in coming months. Meanwhile, the Federal Reserve may maintain its wait-and-see stance until clearer signals emerge on inflation and employment trajectories.

While June's U.S. inflation data appeared broadly subdued, underlying currents tell a different story. JPMorgan's latest research reveals that despite mild headline Consumer Price Index (CPI) performance, tariff-induced price transmission effects on specific goods continue to strengthen. Data from the Bureau of Labor Statistics showed overall CPI rose 0.3% month-over-month, reaching a four-month high of 2.7% year-over-year. Core CPI increased 0.23% monthly and 2.9% annually, slightly below expectations.

Persistent softness in automotive and travel-related sectors continues to drag on inflation. However, import goods exhibit unmistakable upward pressure. JPMorgan analyst Michael S. Hanson attributes these pressures "clearly to tariffs," projecting further intensification in coming months. This counterbalancing price dynamic could keep the Fed sidelined until greater clarity emerges on relative risks to inflation and labor market outlooks.

Tariff transmission effects are becoming increasingly visible. JPMorgan's report notes that while vehicle and travel industry prices remain weak, import goods show pronounced upward momentum. Multiple categories—including household appliances, curtains, floor coverings, sporting goods, and home entertainment items—are posting three-month annualized gains nearing or exceeding 10%. The analysis indicates:

"Prices for high-import-share goods like consumer electronics, home furnishings, and recreational products have demonstrated sustained upward pressure in recent months, contradicting arguments that tariffs haven't reached consumer prices... As more companies deplete pre-stocked inventories and resist further margin compression, these tariff-driven pressures will intensify and broaden in coming months."

Additional June CPI components surpassed expectations: medical care CPI jumped 0.5% while apparel prices surged 0.4%, reversing May's decline.

Automotive sectors remain an inflation drag. New vehicle prices fell 0.3% in June, with used vehicles declining 0.7%—contrary to JPMorgan's industry data suggesting modest gains. Travel-related sectors also underperformed: lodging prices again trailed industry projections, while airline fare increases lagged high-frequency booking data forecasts. JPMorgan anticipates these sectors' atypical softness will normalize and combine with rising import prices to significantly boost inflation readings:

"We maintain that unusual weakness in several key components during spring and early summer has suppressed CPI. As these factors normalize, they'll converge with import price increases to drive substantially stronger inflation in coming months."

Facing this structurally fragmented inflation landscape, the Fed will likely retain its cautious posture. JPMorgan observes:

"These countervailing price dynamics—with risks still tilted upward—should keep the Fed on hold until it gains clearer conviction about relative inflation-labor market risks. Currently, we forecast June core PCE rising 0.28% monthly (2.7% annually), subject to revision after tomorrow's PPI release."

Strengthening core goods prices are elevating this tracking estimate, while trade policy risks remain skewed upward given planned sectoral tariffs and potential higher duties on multiple trading partners before August 1.