US inflation accelerated last month to highest level since February

WASHINGTON AP Inflation rose last month to its highest level in four months as the cost of gas food and groceries rose reversing several months of cooling price pressures Consumer prices rose in June from a year earlier the Labor Department announced Tuesday up from an annual increase of in May On a monthly basis prices climbed from May to June after rising just the previous month Worsening inflation poses a political challenge for President Donald Trump who promised during last year s presidential campaign to at once lower costs The sharp inflation spike of - was the worst in four decades and soured the majority Americans on former president Joe Biden s handling of the economic activity Higher inflation will also likely heighten the Federal Reserve s reluctance to cut its short-term interest rate as Trump is loudly demanding Excluding the volatile food and potential categories core inflation increased in June from a year earlier up from in May On a monthly basis it picked up from May to June Economists closely watch core prices because they typically provide a better sense of where inflation is headed THIS IS A CURRENT NEWS UPDATE AP s earlier story follows below WASHINGTON AP Inflation likely accelerated in June as sweeping tariffs on nearly all imports may have pushed up prices for electronics appliances and other goods economists forecast Consumer prices perhaps rose last month from a year ago up from an annual increase of in May according to information provider FactSet The Labor Department will issue its inflation summary at a m eastern On a monthly basis prices likely rose from May to June the largest increase since January economists project Worsening inflation could pose a political challenge for President Donald Trump who promised during last year s presidential campaign to directly lower costs The sharp inflation spike of - was the worst in four decades and soured the greater part Americans on former president Joe Biden s handling of the business sector Faster price increases would also likely underscore the Federal Reserve s reluctance to cut its short-term interest rate as Trump is loudly demanding Excluding the volatile food and resource categories inflation is forecast to have risen in June from a year earlier up from a rise in May On a monthly basis it is also expected to have picked up from May to June according to FactSet Economists closely watch core prices because they typically provide a better sense of where inflation is headed Trump has imposed sweeping duties of on all imports plus levies on steel and aluminum on goods from China and on imported cars Just last week the president threatened to hit the European Union with a new tariff starting Aug So far the tariffs haven t noticeably pushed up inflation which has been mild for the past four months Core inflation has fallen from in January to in May though that is still above the Fed s target If inflation in June is much weaker than economists forecast Trump will likely renew his demands that Federal Reserve Chair Jerome Powell straightaway reduce borrowing costs Powell and other Fed officers have emphasized that they want to see how the financial system evolves as the tariffs take effect before cutting their key short-term rate The Fed chair has commented that the duties could both push up prices and slow the commercial sector a tricky combination for the central bank since higher costs would typically lead the Fed to hike rates while a weaker financial sector often spurs it to reduce them Trump on Monday explained that Powell has been terrible and doesn t know what the hell he s doing The president added that the financial system was doing well despite Powell s refusal to reduce rates but it would be nice if there were rate cuts because people would be able to buy housing a lot easier Last week White House functionaries also attacked Powell for cost overruns on the years-long renovation of two Fed buildings which are now slated to cost billion roughly one-third more than originally budgeted While Trump legally can t fire Powell just because he disagrees with his interest rate decisions the Supreme Court has signaled he may be able to do so for cause such as misconduct or mismanagement While inflation was mild in May there were already signs in last month s account that tariffs were starting to have specific impact The cost of furniture appliances toys and tools rose though those increases were offset by falling prices for airfares hotels and muted rises in rental costs Several companies have noted they have or plan to raise prices as a consequence of the tariffs including Walmart the world s largest retailer Automaker Mitsubishi mentioned last month that it was lifting prices by an average of in response to the duties and Nike has mentioned it would implement surgical price hikes to offset tariff costs But several companies have been able to postpone or avoid price increases after building up their stockpiles of goods this spring to get ahead of the duties Other companies may have refrained from lifting prices while they wait to see whether the U S is able to reach exchange deals with other countries that lower the duties