WASHINGTON (AP) — The Federal Reserve’s preferred inflation gauge ticked higher last month in a sign that President Donald Trump’s broad-based tariffs are starting to lift prices for many goods.
Prices rose 2.6% in June compared with a year ago, the Commerce Department said Thursday, up from an annual pace of 2.4% in May. Excluding the volatile food and energy categories, prices rose 2.8% in the past year, the same as the previous month, which was revised higher. The figures are above the Fed’s 2% goal.
The uptick in prices helps explain the central bank’s reluctance to cut its key interest rate this week, despite repeated demands from Trump that it do so. On Wednesday, the Fed left its key rate unchanged at 4.3%, and Chair Fed Powell suggested it could take months for the central bank to determine whether the import duties will cause just a one-time rise in prices, or a more persistent increase in inflation.
Trump has attacked Powell personally and repeatedly, and did so again on Thursday for the Fed's reluctance to cut rates, calling him “TOO ANGRY, TOO STUPID, & TOO POLITICAL, to have the job of Fed Chair."
On a monthly basis, prices ticked up 0.3% from May to June, while core prices also rose 0.3%. Both figures are higher than consistent with the 2% target.
“The above-target rise in core prices in June, upward revisions to previous months’ data and the sharp rise in core goods inflation will do little to ease the Fed’s concerns about tariff-driven inflation,” said Harry Chambers, assistant economist at Capital Economics, a forecasting firm. “If these pressures persist, as we expect, a September cut looks unlikely.”
The government's measure of gas prices jumped 0.9% from May to June, while grocery costs rose 0.3%. Many longer-lasting goods that are heavily imported saw clear price increases, with furniture prices up 1.3% just last month, appliances up 1.9%, and computers up 1.4%.
The cost of some services fell dramatically last month, offsetting some of the price pressures from goods. Air fares dropped 0.7% from May to June, while the cost of hotel rooms plunged 3.6% just in one month.
Thursday's report also showed that consumer spending rose 0.3% from May to June, a modest rise that suggests Americans are still spending cautiously. Adjusted for inflation, the increase was just 0.1%, the government said.
Americans' incomes also picked up just modestly, rising 0.3% last month, a rebound after a 0.4% drop in May. But adjusted for inflation and taxes, incomes were flat in June.
Consumers have been cautious all year. On Wednesday, the government said the economy expanded at a 3% annual rate in the second quarter, a solid showing but one that masked some red flags. Consumer spending, for example, rose at a lackluster 1.4% pace, after an even smaller gain of 0.5% in the first three months of the year. A sharp drop in imports in the April-June quarter, which followed a surge in the first quarter, provided a big lift to the government’s calculation of U.S. gross domestic product.
Earlier this month, the government reported that its more closely-watched consumer price index, its primary inflation measure, also ticked higher in June as the cost of heavily-imported items such as appliances, furniture, and toys increased.
Washers stand on display near the entrance to a Costco warehouse Tuesday, July 8, 2025, in Sheridan, Colo. (AP Photo/David Zalubowski)
Several pounds of short ribs show the price per pound at Deep Cuts Dallas Butcher Shop, Thursday, July 24, 2025, in Dallas. (AP Photo/Tony Gutierrez)
AL HENAKIYAH, Saudi Arabia (AP) — Ricky Brabec deliberately gave up his motorbike lead over Luciano Benavides in the Dakar Rally while Nasser Al-Attiyah was happy to cruise through another day closer to his sixth car title on Thursday.
Al-Attiyah started 346-kilometer stage 11 between Bisha north to Al Henakiyah with a 12-minute overall lead and let it drop to less than nine minutes over new second-placed driver Nani Roma in a Ford.
Al-Attiyah was content to let Dacia teammate Sébastien Loeb catch up and pass him to have a teammate nearby for any help and to minimize errors on the mazy, dirt track. Al-Attiyah was 17th, nearly 13 minutes behind stage winner Mattias Ekström, and said he needed to execute the same plan on Friday's last effective racing stage before the end on Saturday.
“If we lose two, three, four minutes no problem,” Al-Attiyah said. “We just need to finish this Dakar in first place.”
Honda cooked up a strategy in the Saudi desert for Adrien van Beveren to open the way and let Brabec catch up after the 190-kilometer pit stop and pick up time bonuses.
Brabec boosted his overall lead from 56 seconds to nearly four minutes just 25 kilometers from the finish. He was also within a minute of the stage lead but he slowed down so KTM rival Benavides was the new overall leader, but only by 23 seconds.
Brabec got his his wish to start Friday's stage 12 six minutes behind Benavides, so he can eye him. They head west to the rally starting point of Yanbu on the Red Sea coast on 311 kilometers of gravel, some river beds with a finish in the dunes.
“A little bit of strategy today and hopefully it pays off tomorrow,” Brabec said. "I feel like its going to be a good day. We’re going back into the rocks so it will be a little bit better for us.”
Brabec is counting on his experience of winning the Dakar in 2020 and 2024 to trump Benavides, who has a best placing of fourth last year.
“I've been in this situation before,” Brabec said. “For the whole two weeks I've been just trying to stay relax, stay comfortable and just be confident, so two days more. I'm gonna do the same thing tomorrow that I've been doing every day; ride dirt bikes and have fun.”
Van Beveren helped Brabec with navigation while fighting with another teammate, Skyler Howes, the entire day for the stage win.
Howes prevailed by 21 seconds for his first career major stage in his eighth Dakar. He was third in 2023 and sixth last year. He's running fifth, 34 minutes off the pace.
Benavides was fourth in the stage and believed the race will be decided on the final 105-kilometer sprint on Saturday.
“I played no strategy like Ricky. I don't care,” Benavides said. “I'm doing what I can to control what I can control.”
Ekström won his third car stage of this Dakar, a special so fast that 12 other drivers were within 10 minutes.
Ford achieved another 1-2-3 stage. Romain Dumas, a three-time winner of the Le Mans 24 Hours, was a career-best second just over a minute back and Carlos Sainz was third.
Only Toyota's Henk Lategan beat Ekström to a checkpoint but Lategan's podium hopes were wrecked after 140 kilometers when a bearing broke on his rear left wheel. Lategan was second last year and second overall overnight but he plunged out of the top 15, at least.
Loeb moved up to third overall, 10 minutes behind Roma and three minutes ahead of Ekström.
AP auto racing: https://apnews.com/hub/auto-racing
Rider Daniel Sanders competes during the eleventh stage of the Dakar Rally between Bisha and Al Henakiyah, Saudi Arabia, Thursday, Jan.15, 2026. (AP Photo/Thibault Camus)
Driver Nasser Al-Attiyah and co-driver Fabian Lurquin compete during the eleventh stage of the Dakar Rally between Bisha and Al Henakiyah, Saudi Arabia, Thursday, Jan.15, 2026. (AP Photo/Thibault Camus)
Rider Skyler Howes competes during the eleventh stage of the Dakar Rally between Bisha and Al Henakiyah, Saudi Arabia, Thursday, Jan.15, 2026. (AP Photo/Thibault Camus)
Driver Henk Lategan, left, and co-driver Brett Cummings repair their car during the eleventh stage of the Dakar Rally between Bisha and Al Henakiyah, Saudi Arabia, Thursday, Jan.15, 2026. (AP Photo/Thibault Camus)
Driver Nani Roma and co-driver Alex Haro compete during the eleventh stage of the Dakar Rally between Bisha and Al Henakiyah, Saudi Arabia, Thursday, Jan.15, 2026. (AP Photo/Thibault Camus)
