Energy and housing costs were the major drivers of inflation, but consumers are starting to feel the impact of tariffs on basic goods.

Critics of President Trump's tariff policies have been waiting for the import taxes to raise the inflation rate. That effect may be beginning.

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.