Inflation Forecast to Creep Up Amid Tariff-Related Price Hikes

Inflation is creeping up as retailers hike prices in response to ongoing U.S tariffs.

That’s according to a report from Bloomberg News Friday (Aug. 8), citing the median projection in its survey of economists.

That survey showed the core consumer price index climbing 0.3% in July, after creeping up 0.2% the prior month. This would mark the largest gain since the beginning of the year, the report said, though it could be offset by the fact that cheaper gasoline likely helped limit the overall CPI to a 0.2% increase.

The report notes that rising tariffs have begun to be passed onto consumers in purchases of things like furniture and recreational goods, with economists expecting the higher duties to keep filtering through from retailers to shoppers.

Bloomberg adds that this has presented a dilemma to the Federal Reserve after a year of keeping interest rates the same in hopes of determining if tariffs will trigger ongoing inflation. Meanwhile, the labor market is showing signs of flagging.

With job market concerns in mind, many companies are seeking ways to avoid passing on tariff costs to consumers, the report said. Economists predict that government data this week will show a solid uptick in retail sales for July as incentives helped drive vehicle purchases and Amazon’s extended Prime Day sale attracted online shoppers.

“One reason firms are having trouble hiking prices is that households’ real disposable income growth has been dismal — running at a third of the pandemic peak,” Bloomberg’s economists said. “Incorporating payroll revisions, we estimate that real income growth actually contracted in June. Yet nominal retail sales were likely robust in July. We caution against equating a strong headline print with resilient consumption.”

Research by PYMNTS Intelligence has examined the myriad ways in which tariffs are impacting consumers. For example, June’s “Stock Out” survey found 47% of U.S. shoppers could not find or afford everyday items because tariffs impacted supply chains or drove up prices.

In addition, close to a third of surveyed consumers said they delayed or cancelled discretionary buys such as electronics, home décor or even back-to-school supplies. And 42% said they now compare prices at three or more retailers before making a buy, compared to 27% in January.

PYMNTS analysts caution that extended out-of-stocks can “train” shoppers to think of once-routine purchases as risky, driving long-term thriftiness and eating away at lifetime customer value for brands.

“Tariffs are no longer an abstract policy lever,” PYMNTS wrote last week. “They are a daily pain point at the checkout aisle. Retailers must brace for a consumer who is both price-sensitive and chronically unsure whether the product will even be on the shelf.”

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