By Elisabeth Buchwald, CNN

(CNN) — President Donald Trump this week declared on Truth Social that there’s “No Inflation!!!” But Consumer Price Index data released Thursday tells a different story.

Not only does the data show rising inflation, but the pace of consumer price increases is accelerating.

Consumer prices rose 0.4% in August from the month before, pushing the annual inflation rate to 2.9%, the highest since January, according to Bureau of Labor Statistics data released Thursday. The acceleration comes as Trump has levied higher tariffs on practically everything the United States imports while also cracking down on undocumented immigrants, including at their workplaces.

Tariffs and the stepped-up immigration enforcement are both contributing to higher prices, many economists say, warning that the policies could push prices even higher unless the administration changes course.

“Slowly - quite slowly in fact - but surely, we are seeing evidence of more tariff pass through” to consumers, Brian Coulton, chief economist at Fitch Ratings, wrote in a note on Thursday.

The nation’s annual inflation rate during Trump’s term this year is slightly more muted than the 2.9% headline figure the BLS reported on Thursday, White House press secretary Karoline Leavitt pointed out.

“As the Trump economic agenda continues to take effect, the trillions of dollars in private sector and foreign investments, historic tax cuts, massive deregulation, and energy dominance that the president is spearheading will fuel an economic boom,” Leavitt said in a statement to CNN.

Food prices on the rise

Among the biggest contributors to the overall inflation pickup in August was food, with grocery prices rising 0.6% — the highest monthly jump in nearly three years. Prices of food purchased at restaurants and other eateries increased 0.3% last month, matching July’s rate.

Heavily imported goods that are subject to higher tariffs notched some of the biggest food price increases. For instance, coffee prices surged by 3.6%, the largest one-month increase since 2011. Compared to a year ago, coffee prices are up 20.9%, a near-record annual increase. The United States relies on foreign countries for coffee, given there are very few places it can grow domestically.

Brazil is the top US source of coffee, according to US Department of Agriculture data. However, Brazilian imports – including coffee – began facing whopping 50% tariffs last month.

Diane Swonk, chief economist at KPMG, predicts coffee prices “will easily exceed the record as the full effects of the 50% tariffs levied on Brazil last month work their way onto store shelves.”

Tomato prices were up 4.5% last month, another notable increase. The United States depends on Mexico for a variety of fresh tomatoes, most of which began facing 17% tariffs in July after a nearly three-decade-old trade agreement expired.

Beyond tariffs, Trump’s immigration policies — including mass arrests and deportations of foreigners who entered the country illegally — ?are contributing to higher food prices, Sung Won Sohn, professor of finance and economics at Loyola Marymount University, told CNN.

Pew Research Center estimates that more than 750,000 immigrants in the US have left the workforce since January. The agriculture and food services sectors are both dependent on foreign-born workers and are likely to be disproportionately affected by ramped-up immigration arrests compared to other industries, said Sohn, who is also chief economist at SS Economics.

Having fewer immigrant workers has pushed labor costs up, which has fueled higher food prices, he said.

Apparel and accessories

Other highly tariff-exposed goods that saw some of the steepest price increases last month include: sewing machines, fabric and supplies (+9.1%); jewelry (+6.8%); women’s outerwear (+4.4%); men’s pants and shorts (+4.2%).

The one-month jump in jewelry prices was the largest ever recorded since the BLS began reporting CPI in the late 1910s.

Mostly modest price increases — for now

Overall, tariff-related effects were relatively modest in the August inflation report. But that could change as the full impacts of the tariffs take shape.

Prices have so far been contained partly because businesses stockpiled inventory before Trump’s tariffs took effect. Additionally, many businesses have absorbed the majority of their tariff bills for now rather than passing all costs to consumers via price hikes.

Their motivation for avoiding that stems in part from hopes that the bulk of Trump’s tariffs currently in effect could be invalidated as part of an ongoing case now heading to the Supreme Court, JPMorgan economist Michael Hanson wrote in a note on Thursday.

Regardless of the outcome, he’s expecting the administration to find other ways to “maintain the current elevated level of the effective tariff rate. As such, we continue to anticipate additional firming of consumer inflation readings in coming months.”

The-CNN-Wire
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