Tariffs Show Up in CPI, But the Jury Is Still Out on the Impact
June’s Consumer Price Index report came in at 2.7 percent year over year and 0.3 percent month over month, with core inflation rising 2.9 percent. Analysts spotted some tariff-related price increases in goods like appliances, furniture and clothing. But those items are just a small slice of the overall CPI basket. The main drivers of inflation this month were the usual suspects: housing costs, medical care and professional services.
Bonds React, But With Reservations
Bonds did initially rally when CPI came in below forecasts. Yields eased back from recent highs, reflecting a positive initial reaction. But that rally felt muted and then turned. With shelter costs alone making up nearly half of year over year CPI gains and service inflation still running hot, bond investors are cautious. As the stock market opened there was a lot of bond selling then and it continued throughout the day making rates move up.
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Tariffs Are a Factor, But Not the Whole Story
If tariffs drive up prices on certain goods, it follows that inflation could rise. But many companies anticipated this. They stockpiled before tariffs kicked in and absorbed some costs. That has slowed the immediate pass-through to consumers. June may show the first subtle tariff effects. But large parts of inflation still come from non-tariff sources like rent and healthcare.
The Jury Is Still Out
Markets now face a split narrative. Inflation data is mixed. Tariffs seem to be creeping into the mix, but widespread price hikes are not here yet. Bond investors have given the reports a head fake, but rates aren’t charging back to rate lows. That caution reflects the uncertainty about how deeply tariffs will affect inflation and whether those effects will be short lived or structural.
Thinking about buying or refinancing? Contact Better Rate Mortgage and get a clear read on where rates may be headed next.
What You Should Know
Inflation is part of the mortgage landscape. It influences bond yields, which influence rates. For now, June’s CPI gives us a mixed signal. Tariff effects are present, but not yet dominant. Core inflation remains sticky thanks to housing and services. That means mortgage rates could stay elevated or move quickly if inflation shifts. Staying flexible and informed is key.
Bottom Line
Tariffs are showing up in CPI data, but not enough yet to derail inflation forecasts. Mortgage rates took a tentative step lower, but then went higher and with inflation persistence in housing and services there is still uncertainty. If you are buying or refinancing, now is the time to stay informed and work with someone who reads the data as it comes in.
Want a clear path forward? Contact Better Rate Mortgage and let’s make sure your mortgage decision is backed by smart data—today and tomorrow.
Sean Zalmanoff July 15, 2025
