Nearly half of US firms paying tariffs expect further price increases, delaying disinflation and complicating Fed policy.
US firms continue to pass tariff costs to consumers, with nearly half planning additional price hikes. The New York Fed’s analysis highlights that 47% of service firms and 44% of manufacturers paying tariffs anticipate further increases, some extending six months or more.
Gradual pricing adjustments, fixed contracts, and policy uncertainty are prolonging the inflationary impact. This suggests tariff-driven inflation may persist longer than policymakers anticipated, challenging the Fed’s disinflation timeline.
The Fed’s recent minutes did little to shift hawkish rate expectations, as demand-driven disinflation remains uncertain. Markets remain sensitive to supply shocks, reinforcing concerns over sustained inflation pressures.