The Inflation Force of Tariffs

With the April Consumer Price Index (CPI) reading approaching, markets are once again preoccupied with inflation—though this time the drivers are shifting. As the Federal Reserve holds interest rates steady, a new mix of tariff pressures and oil price movement is reshaping the inflation landscape. The result is a landscape defined by transitory shock and longer-term uncertainties.

More current data suggests tariffs are beginning to impact consumer prices, notably in the auto sector. Average transaction prices on new vehicles rose 2.2% in April, a greater-than-usual monthly increase. Prices on used cars recorded an equally significant increase of 2.7%, according to Manheim's non-seasonally adjusted index. These surges are due to preemptive buying, as consumers and dealers try to get ahead of tariff increases that were announced early April. At the same time delinquencies for auto loans are pretty high: