AIER’s Everyday Price Index (EPI) rose to 295.8 in June 2025, an increase of 0.51 percent. June was the first month since February, in which the EPI rose more on a percentage basis than our same-month CPI proxy, ending a streak of three months when EPI increases were lower.
Of the 24 components making up the EPI, fifteen rose in price, seven declined, and two were unchanged from the previous month. The largest price increases were seen in housing fuels and utilities, fees for lessons and instruction, and housekeeping supplies. The most pronounced declines occurred in intracity transportation, nonprescription drugs, and recreational reading materials.
The sharp increase in the AIER Everyday Price Index in June 2025, its largest since February and the seventh largest since January 2024, probably reflects rising costs in tariff-sensitive consumer goods. Nine of its 24 constituent categories are highly exposed to tariffs on imports from Mexico and China, including housekeeping supplies, tobacco products, personal care products, pet products, alcoholic beverages at home, nonprescription drugs, audio media, recreational reading materials, and food at home. An additional three categories — food away from home, prescription drugs, and motor fuel — are moderately exposed to tariff-driven price pressures.
AIER Everyday Price Index vs. US Consumer Price Index (NSA, 1987 = 100)
(Source: Bloomberg Finance, LP)
On July 15, 2025, the US Bureau of Labor Statistics (BLS) released its June 2025 Consumer Price Index (CPI) data. On a monthly basis, the headline CPI rose 0.3 percent, which was in line with forecasts. Core CPI rose 0.2 percent versus an expected 0.3 percent.
The increase in the monthly headline number was largely driven by shelter costs, which advanced 0.2 percent. Within shelter, owners’ equivalent rent rose 0.3 percent, rent increased 0.2 percent, and lodging away from home declined 2.9 percent. Core CPI, which excludes food and energy, rose 0.2 percent in June following a 0.1 percent gain in May.
Food prices continued their steady climb, rising 0.3 percent in June. Food at home also increased 0.3 percent, though gains were uneven across categories: nonalcoholic beverages jumped 1.4 percent (with coffee up 2.2 percent), fruits and vegetables rose 0.9 percent (citrus fruits up 2.3 percent), and “other food at home” edged up 0.2 percent. Elsewhere, cereals and bakery products declined 0.2 percent as meats, poultry, fish, and eggs fell 0.1 percent (a large portion of which was due to a 7.4 percent drop in egg prices). Dairy products slid 0.3 percent. Food away from home rose 0.4 percent, led by an 0.5 percent increase in full-service meals and a 0.2 percent rise in limited-service meals.
The energy index increased 0.9 percent following a 1.0 percent decline in May, with gasoline prices up 1.0 percent, electricity rising 1.0 percent, and natural gas increasing 0.5 percent.
In core, household furnishings rose by 1.0 percent, as did medical care (up 0.5 percent), recreation (up 0.4 percent), apparel (up 0.4 percent), and personal care (up 0.3 percent). The medical care increase was supported by gains in hospital services and prescription drugs (each up 0.4 percent) and physician services (up 0.2 percent). Offsetting some of those gains were declines in used cars and trucks (down 0.7 percent), new vehicles (down 0.3 percent), and airline fares (down 0.1 percent).
June 2025 US CPI headline and core month-over-month (2015 – present)
(Source: Bloomberg Finance, LP)
For the 12 months ending in June 2025, the headline Consumer Price Index rose 2.7 percent, higher than the forecast increase of 2.6 percent. The year-over-year increase in core CPI met expectations of a 2.9 percent rise.
June 2025 US CPI headline and core year-over-year (2015 – present)
(Source: Bloomberg Finance, LP)
From June 2024 to June 2025, food prices rose broadly. The food at home index increased 2.4 percent and food away from home by 3.8 percent. Within food at home, meats, poultry, fish, and eggs surged 5.6 percent, driven largely by a 27.3 percent jump in egg prices alone. Nonalcoholic beverages rose 4.4 percent, while cereals and bakery products and dairy each rose 0.9 percent, fruits and vegetables 0.7 percent, and other food at home by 1.3 percent. The index for full-service meals climbed 4.0 percent as limited-service meals rose 3.5 percent.
The energy index declined 0.8 percent over the year, as gasoline prices dropped 8.3 percent and fuel oil fell 4.7 percent, though electricity rose 5.8 percent and natural gas leapt 14.2 percent. Within the core inflation index, over the past 12 months shelter prices increased by 3.8 percent. Notable gains were also seen in motor vehicle insurance (up 6.1 percent), household furnishings and operations (up 3.3 percent), medical care (up 2.8 percent), and recreation (up 2.1 percent).
While headline inflation was pushed higher by gasoline and shelter, the uptick in core prices was largely prompted by tariff-sensitive goods — appliances, furniture, toys, and apparel — suggesting early signs of import cost pass-through. Declines in new and used car prices helped offset some of those pressures. Services inflation, particularly outside housing, remained firm, and medical care posted a notable gain. Housing costs, a major inflation driver in recent years, are cooling.
Some companies, like Walmart and Nike, have begun modest price increases in response to tariffs, while others are delaying moves until trade negotiations play out. The inflation picture is now shaped by growing uncertainty surrounding President Trump’s sweeping tariffs, which include across-the-board 10 percent import duties, 50 percent levies on steel and aluminum, and threats of both a 50 percent tariff on copper and 30 percent on EU goods starting August 1. Though June price data showed only scattered evidence of broad-based tariff inflation, underlying price strength in core goods — excluding cars — was the sharpest monthly increase since late 2021.
Fed Chair Jerome Powell has signaled caution, saying he wants to see how the economy digests the tariffs before adjusting rates, and policymakers appear divided: while inflation remains modest by post-pandemic standards, the risk of sticky price increases from prolonged trade frictions is keeping the Fed sidelined for now. Trump continues to demand rate cuts, publicly criticizing Powell while asserting that inflation is already under control. Yet with real average hourly earnings growth decelerating to just 1.0 percent annually and retail sales data due later this week, the Fed is likely to hold steady at its July meeting, with markets increasingly looking to September for a possible pivot. A cut may be in the cards if both inflation cooperates and tariff escalation is avoided.