While pundits looked with their magnifying glasses for tariffs in consumer goods prices, it was in services, which are not tariffed, where inflation took off again.

Consumer inflation likely accelerated in June, as the Trump administration's tariffs start to push up prices. The Labor Department's consumer-price index for last month is due at 8:30 a.m. ET Tuesday.

The risk is that a hotter-than-expected June inflation report — one that Fed Chair Jerome Powell recently called among the most important for assessing the impact of tariffs — could slow the pace at which the central bank lowers interest rates. Importantly, that could also throw a wrench into the stock market’s record-setting rally.

CPI inflation rose faster than expected, aligning with forecasts for higher inflation in the coming months. Check out what investors need to know.

Consumer Price Index (CPI) report was unexpectedly hot, showing a 0.3% increase month-over-month and a 2.7% rise year-over-year. In response, markets fell from recent highs. This is likely due to investors reassessing the likelihood of near-term interest rate cuts by the Federal Reserve.

Services inflation, especially rent and shelter inflation, continued to decline, offsetting rising core goods inflation that may be influenced by tariffs, Steve Hou, a quant researcher at Bloomberg, said in a Tuesday post on X.

For the second consecutive week mortgage rates moved higher, as the likelihood of the Federal Reserve acting diminished after the Consumer Price Index report.

UK inflation figures showed a surprise upward change between May and June, CPI rising 3.6 per cent, as the struggle to bring down costs continues. Increasing food and fuel prices last month underline the challenge to do so.