While recent price trends may appear stable, economists warn that this calm could be the eye of the storm. The new tariffs on imported goods are ticking like a time bomb, ready to trigger another wave of price increases that will ultimately hit consumers' wallets. Let's examine the underlying causes and how to prepare for the coming price surge.

The Lag Effect: Why Inflation Hasn't Hit Yet

Why haven't prices skyrocketed immediately after the tariffs took effect? Multiple factors are creating a delayed inflation effect:

• Phased tariff implementation: The current administration's tariff policy wasn't implemented all at once. While some tariffs took effect early this year, most were announced and implemented after April, meaning their full impact takes time to materialize.
• Trade policy uncertainty: Constant shifts in trade policy have made pricing decisions difficult for businesses. Announced tariffs might be delayed, canceled, or suddenly increased, creating market uncertainty and slowing price adjustments.
• Extended supply chains: Goods moving from overseas factories to U.S. shelves must navigate shipping, customs, and domestic transportation - a process taking weeks or months. Many imported goods are raw materials requiring additional processing, further delaying price transmission.
• Inventory stockpiling: Businesses have been hoarding imported goods since last year to prepare for potential supply chain disruptions and tariff increases. This temporary buffer has softened the immediate price impact.

Who Bears the Cost? Consumers Will Pay Most

The additional costs from tariffs aren't absorbed solely by exporters or importers, but distributed through the supply chain:

• Foreign exporters are absorbing about 20% of the additional costs to maintain market share
• The remaining 80% is being split between U.S. businesses and consumers
• Approximately 70% of tariff costs will ultimately be passed to consumers through higher prices

Businesses have been hesitant to raise prices immediately due to weak consumer spending and years of high inflation. They fear price increases could further suppress demand and reduce sales.

Seasonal Factors Masking Inflation Signals

Recent mild inflation data partly results from temporary factors:

• Summer typically sees higher spending on services (travel, entertainment) with less focus on goods prices
• Upcoming back-to-school season and winter holidays will shift spending toward goods, making inflation more visible
• Official inflation data has inherent lag time - June's key inflation figures won't be released until July
• Falling gas prices and slowing service sector inflation have masked rising goods prices in overall indices

Early Warning Signs: Some Prices Already Rising

Despite seemingly stable overall inflation, private and government data show clear increases in tariff-affected categories:

• May's Consumer Price Index showed appliances, toys, and home goods reaching four-year price highs
• E-commerce analysis of 200,000 products shows consistent price increases since January in furniture, toys, clothing, and footwear
• Some retailers are raising prices faster than average

What Comes Next: Broader Price Increases Loom

Industry experts predict:

• More widespread price increases as tariff effects ripple through supply chains
• Potential "shrinkflation" (reduced package sizes) and expansion of store brands
• June's CPI data may mark an inflation turning point
• Overall CPI could peak at 2.9% later this year

How to Protect Your Wallet

Economists recommend these strategies to mitigate the impact:

• Plan purchases carefully and compare prices
• Watch for sales and promotional events
• Consider store-brand alternatives
• Review and reduce discretionary spending
• Explore inflation-resistant investments

While current inflation appears manageable, the delayed effects of tariffs could soon unleash a new wave of price increases. Consumers would be wise to prepare now for the challenges ahead.