Inflation rose by three tenths of a percentage point to 2.7% for the year ending in June, the Bureau of Labor Statistics reported Tuesday in an update to the consumer price index. 

Forecasters had expected inflation to tick up to 2.6% in the consumer price index.

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Core inflation, a measure that strips out volatile food and energy prices, rose a tenth of a percentage point to a 2.9% annual rate.

The increase in the headline rate of inflation suggests some renewed price pressure as President Donald Trump carries out a trade war involving heavy tariffs. Economists generally expect that the tariffs will have the effect of raising prices, all else equal. 

In the month of June alone, prices rose 0.3%.

Officials at the Fed are watching the inflation numbers closely to determine whether to lower interest rates further to spur more economic activity or to forgo further rate cuts to try to tamp down inflation.

The Fed cut rates by a whole percentage point last year. As inflation proved sticky, though, the central bank opted to hold interest rates steady at its January and March meetings.

The Fed’s goal is 2% annual inflation.

The latest inflation prints come against the backdrop of an ongoing — and escalating — war by the Trump administration against Fed Chairman Jerome Powell over the Fed’s refusal to start cutting interest rates.

In late May, Trump summoned Powell to the White House, where Trump pushed for lower rates in a meeting attended by several administration officials, including Vice President JD Vance, Treasury Secretary Scott Bessent, and Commerce Secretary Howard Lutnick.

Trump has also berated Powell to the press and on social media. It is a legal gray area whether Trump has the ability to fire Powell, but Powell has said he doesn’t believe that the president has that authority.

Office of Management and Budget Director Russ Vought further ratcheted up pressure against Powell last week when he sent a letter peppering Powell with questions over the renovation of the Fed’s headquarters in Washington, D.C. The letter said that Trump is “extremely troubled” by his management of the Fed and called the overhaul of the headquarters “ostentatious.”

ECONOMY ADDS 147,000 JOBS IN JUNE, MORE THAN EXPECTED

Trump and Republicans ran on lowering inflation, which got to its highest levels in decades under former President Joe Biden. If inflation is vanquished, it would be a massive political win for Republicans heading into the midterm elections.

But, if inflation ticks back up and the Fed is forced to keep holding interest rates higher for longer, it not only makes the situation between the Trump administration and Powell more precarious, but also is bad political news for Republicans.