Tariffs Fuel US Inflation Surge Above Pre-Pandemic Pace

US inflation has continued to rise above pre-pandemic levels, driven in part by the administration's tariff agenda. Core goods inflation stood at 1.9 per cent year over year as of January, a significant shift from the minus 0.6 per cent average seen before the pandemic.

The recent implementation of forced labour tariffs has covered nearly all US imports, but will only replace less than 60 per cent of lost revenue due to the Supreme Court's ruling on emergency tariffs.

According to official figures from the US Bureau of Labor Statistics, consumer prices rose 3.5 per cent over the twelve months to June 2026, with food prices climbing 3.0 per cent. The Minneapolis Fed's analysis suggests that housing inflation has returned to its pre-pandemic rate and core services have stayed stable, while core goods inflation has been rising steadily since late 2024.

The tariff squeeze is affecting consumers, leading to a slow erosion of purchasing power rather than a single dramatic price spike. Goods with high import costs, such as electronics, clothing, and household appliances, are the first to reflect new tariff costs, which are often passed on to consumers.