Inflation picked up in August amid higher prices for staples like food and electricity, while tariffs put upward pressure on prices for physical goods like clothing and household furniture, economists said.
The consumer price index, a key inflation gauge, rose 2.9% in August from a year earlier, the Bureau of Labor Statistics reported Thursday.
That’s an increase from 2.7% in July and the fastest annual pace of inflation since January.
“Inflation is uncomfortably high and it’s accelerating,” said Mark Zandi, chief economist at Moody’s. “I think we should expect a further acceleration in inflation over the next six to 12 months.”
Tariffs contribute to rising goods prices, economists say
The CPI tracks how quickly prices rise or fall for a basket of consumer goods and services, from haircuts to coffee and concert tickets.
Inflation is reigniting largely due to reinflation for consumer goods, said Sarah House, senior economist at Wells Fargo Economics.
Prices for “core” commodities — which exclude food and energy — rose 1.5% in August from a year earlier, the fastest annual pace since May 2023.
Excluding the pandemic and its aftermath, core commodities haven’t risen that quickly since 2012.
Tariff policies pursued by President Donald Trump appear to be the main contributor to rising inflation for goods, she said.
U.S. entities that import goods from overseas pay the import duties. Companies will ultimately pass at least some of those additional taxes on to consumers, though the process will take many months due to various business strategies to try to blunt the impact, economists said.
“The fact that we’re seeing some of the largest tariffs since the 1940s I think is certainly a part of the pickup in goods prices,” House said.
The tariff impact has been most noticeable in categories like household furnishings, appliances, apparel and recreational goods, economists said.
Apparel prices, for example, have risen by a relatively muted 0.2% over the past year, according to the CPI data. However, their annual inflation rate has jumped sharply in recent months, having climbed for three consecutive months from a recent low of -0.9% in May.
A large share of clothing imported to the U.S. comes from Asian nations where tariffs have risen considerably, Zandi said.
“Tariffs are all over the apparel prices,” Zandi said. “They’ve risen quite strongly the last few months.”
