If you’re a U.S. consumer trying to stretch your paycheck right now, there’s good and bad news. Inflation ticked up slightly in June, according to official government data. However, new tariffs on imported goods threaten to drive up prices across a wide range of products, especially essentials like food, clothing, and cars, in the months ahead.

Here’s what you need to know as you head into the second half of 2025.

Prices Are Going Up

The Consumer Price Index (CPI), which measures the average change in prices for common goods and services, rose 0.3% in June. Over the past year, it’s up 2.7%, still above the Federal Reserve’s 2% target.

The main drivers behind June’s increase:

• Rent and housing costs continue to rise, up 3.8% over the past year.
• Food prices rose another 0.3% in June and are now 3.0% higher than a year ago, with noticeable increases in items like cereal and fruits. Egg prices are up 27.3% compared to last year, driven by supply issues and higher feed costs.
• Gas prices saw a modest bump in June, up 1% for the month. Energy prices overall are down 0.8% from this time last year.

Lower-Income Families Hit the Hardest

The impact isn’t felt equally. A report from Yale finds that low-income households will bear a disproportionate share of the burden, as they spend more of their income on essentials like food and clothing. For households at the bottom of the income distribution, annual losses reach $1,300 before spending shifts, highlighting the regressive nature of tariffs. Post-substitution, where consumers adjust by seeking cheaper alternatives, the price increase settles at 1.6% or a $2,100 loss per household.

The report reveals that the United States is facing its highest average tariff rates in almost a century, following a wave of new tariffs and retaliatory measures implemented throughout 2025. 

According to Yale, Clothing and textile prices could be hit hardest. Shoe prices could be up 39% short-run, settling at 18% higher long-term. Apparel could be up 37% short-run, 18% long-term. Food prices rise 3.3% short-run (fresh produce up 6.8%), with a long-run increase of 2.9%. Motor vehicles: Prices surge 13.8% short-run, adding nearly $6,600 to the cost of a new car; long-run prices remain 10.4% higher.