Tariffs are expected to start showing up more in consumer prices as holiday shopping season starts

While the impact so far this year has been muted, tariffs are expected to catch up with prices consumers pay just in time for the holiday shopping season.

President Donald Trump's tariffs on a plethora of items and individual countries, which started in April, have coincided with common inflation measures trudging along between 2.5% and 3% this year.

While economists don't see a major spike coming in common measures such as the consumer price and the personal consumption price indexes, they expect the tariffs will keep those gauges elevated at a time when they otherwise would be moving lower.

“There have been some questions in recent months as to whether tariffs have led to higher inflation for consumers,” Bank of America economist Aditya Bhave said in a note. “We think there's no debate — tariffs have pushed consumer prices higher.”

Tariff impacts have been muted so far as companies built up inventories ahead of the duties and absorbed some of the impact through compressed profit margins.

Bank of America, though, expects that tariffs will be adding about half a percentage point to the core PCE measure the Federal Reserve uses when assessing inflation. With tariffs, BofA estimates that the inflation rate would be 2.9% in September, so without them that would mean a measure closer to 2.4%. The numbers are similar to ones Fed Chair Jerome Powell cited Wednesday. The core PCE on an annual basis was 2.9% in August.

These percentage point differences matter to the Fed, which tries to keep core inflation, excluding food and energy, at 2%, a level it has been above since March 2021. Two Fed officials — regional presidents Jeffrey Schmid of Kansas City and Lorie Logan of Dallas — said Friday they did not agree with their colleagues' decision Wednesday to lower the central bank's key interest rate.

For consumers, they also matter. Bhave estimates that shoppers are bearing about 50%-70% of total tariff costs, with businesses bearing the rest.