The Wave of Tariffs Reaches Prices: Cheap Gasoline, Expensive Furniture. The True Nature of Fluctuating U.S. Inflation

Does U.S. Inflation Indicate a "Quiet Reacceleration"?—Ahead of the July CPI release, economists' consensus points to a slight uptick in the core CPI to +0.3% month-over-month. This acceleration from June's +0.2% is attributed to the gradual passing on of tariffs raised from spring to summer. However, a drop in gasoline prices is likely to keep the overall CPI growth around +0.2%.

This aligns with the overview from NDTV Profit (sourced from Bloomberg). While price increases are leading in import-heavy sectors like "household furniture" and "leisure goods," growth in core services remains subdued. The Federal Reserve has kept policy rates unchanged this year, prioritizing the assessment of whether tariff-induced inflation is transient or persistent. The simultaneous slowdown in employment adds complexity to their decision-making.

On the calendar side, the Bureau of Labor Statistics will release the "July CPI" on August 12 at 8:30 AM Eastern Time (9:30 PM Japan Time). The market is pricing in a headline of +0.2% and core of +0.3% up until the release, with room for adjustments in the fall's monetary policy path depending on the announcement.Bureau of Labor Statistics

There are many factors reinforcing the latest outlook. Previews from Bloomberg, Morningstar, and other market-related companies generally agree on the tone of "tariff penetration pushing up some goods prices," but note that services remained relatively calm as of June. Both headline and core are expected to show a slight year-over-year increase, with the focus on trend assessments for the latter half of the year.Bloomberg.comMorningstarSeeking Alpha

Another axis moving current market sentiment is the U.S.-China "tariff truce" deadline. As the August 12 date approaches, the forex market remains in a wait-and-see mode with a stable dollar. While the possibility of an extension is discussed, uncertainty remains, creating a "dual event risk" alongside the CPI.Reuters

So, how visible is the "tariff inflation" already? As of June, increases in imported goods like appliances, clothing, toys, and furniture have been observed, with the "initial wave" of tariffs beginning to appear in the data. Reviews from S&P Global and AP News highlight these price increases in addition to movements in gasoline and food.S&P GlobalAP News

On the consumption side, July's retail sales are expected to be robust due to automotive sales incentives and the impact of Amazon Prime Day. There is also analysis suggesting that sales were in an environment conducive to growth due to lower ad CPCs and extended campaigns. However, a behavioral shift has been observed where "clicks increased, but consumers are comparing more cautiously," indicating retailers' hesitation to fully pass on price increases.NDTV ProfitSkaiRetail TouchPoints

On the other hand, the market is becoming nervous about "stagflation concerns." While the stock market is on a rebound trend, voices are growing that are aware of the worst-case scenario (stagflation-lite) where a slowdown in employment and inflation reacceleration strengthen simultaneously. If the CPI is strong, it could become a tug-of-war with the Fed's easing expectations, potentially influencing future valuations and dollar trends.MarketWatchBusiness Insider

Finally, let's organize the timeline.
・August 12 (9:30 PM Japan Time): BLS releases July CPI. The market's median forecast is headline +0.2%, core +0.3%.Bureau of Labor StatisticsMorningstar
・Same day: Deadline for the U.S.-China tariff truce. Whether it is extended or not could be a short-term volatility factor for forex, stocks, and commodities.Reuters

Summary of SNS Reactions (Synopsis)

※The following are the views of individual contributors and not official statistics. Refer to the original text for links.

• Economists and market commentators predominantly view "core +0.3% forecast" and "tariff footprints on goods prices" as mainstream. A BMO-related comment uses the metaphor "this is just the tip of the iceberg (tariffberg)."MorningstarBluesky Social

• Some journalists and strategists emphasize the rise of "import-heavy goods" such as clothing, furniture, and toys.X (formerly Twitter)AP News

• Policy-related accounts and economists also include rebuttals that recent monthly data has been calm, urging caution about short-term fluctuations.X (formerly Twitter)

• On platforms like Reddit, general posts show a mix of concerns like "tariffs will start to have a real impact" and "average tariff rates are at historical levels," along with historical comparisons.Reddit

What to Watch (Checklist)

1. Price direction of core goods (especially furniture, appliances, toys, clothing): A litmus test for the penetration of tariffs.AP News

2. Stickiness of core services: A key to determining the "persistence" of inflation.

3. Outcome of the U.S.-China truce: Whether it is postponed or extended will change the uncertainty in forex and inflation forecasts.Reuters

4. July retail sales: How much the "volume" boosted by promotions offset the price increase.Skai
   
   

Powered by Froala Editor