Trump’s Tariffs Are Pushing Prices Up. Thursday We’ll Learn How Consumers Feel About That.

People shop at a Manhattan retail store on July 15, 2025 in New York City. (Spencer Platt/Getty Images)

With tariffs edging consumer prices higher, all eyes now turn to the Census Bureau’s retail sales report to gauge the true resilience of American shoppers.

The report, due Thursday morning, will round out a slew of economic data released over the course of the week that investors have been anxiously awaiting to help “sketch out a landscape for how trade policy is affecting the economy,” wrote Glenmede’s investment strategy team in a note Monday.

June’s reading of the consumer price index, released Tuesday, suggests that higher tariffs are starting to trickle down into consumer prices. Headline inflation rose to an annual rate of 2.7% in June from May’s 2.4% gain, with discretionary categories such as food, household furnishings, recreation, and apparel seeing notable price increases.

Retail sales data may now help gauge whether consumers are balking at higher prices or are still spending despite price volatility, Glenmede’s team added.

Economists polled by FactSet expect retail sales to have ticked up by 0.2% from May to June, reversing May’s 0.9% decline.

All in all, the data are expected to reflect what big banks, economists, analysts, and retailers have said to describe the current consumer mind-set: Americans are cautious, but resilient.

Lower vehicle sales will likely drag on the headline figure, given that car sales have declined for three consecutive months as of June, according to Bill Adams, chief economist for Comerica Bank. Many consumers rushed to buy cars earlier this spring to get ahead of tariffs. Excluding auto sales, total retail sales are expected to rise by 0.4% month over month. Other big-ticket items, such as appliances, electronics, and furniture, might also be soft given that they saw a surge in pull-forward demand earlier this year.

“We continue to struggle to see signs of weakness…the consumer basically seems to be fine,” said Jeremy Barnum, JPMorgan’s chief financial officer, during the company’s earnings call Tuesday.

Wells Fargo CEO Charlie Scharf had a similar message. He noted that credit-card spending growth, despite having softened “very slightly” in the second quarter, is still up year over year and remains strong overall, while consumer delinquencies have continued to decline.

“What we see regarding the health of our clients and customers has not changed. Consumers and businesses remain strong as unemployment remains low and inflation remains in check,” Scharf said on an earnings call Tuesday.

That said, as Scharf notes, data suggest that spending momentum is slowing as concerns over how tariffs will affect prices in the future has made consumers wary about overextending themselves.

Retailers are bracing themselves for consumers to become even more value conscious, discerning, and more prone to volatile spending patterns driven by tariff headlines and geopolitical uncertainty, according to Jharonne Martis, director of consumer research at LSEG.

Americans’ willingness to spend may become further constrained if food prices keep increasing, analysts say. Grocery prices ticked up 0.3% in June from May, and the cost of dining out rose by 0.4%. Aditya Bhave, an economist at BofA Securities, recommends that investors keep an eye on food-services spending for a better read into how tariffs are influencing discretionary demand.

Monthly spending at restaurants fell 0.9% in May, and June visits to all dining establishments were up an average of just 0.1% year over year, according to data from Placer.ai, a firm that tracks foot-traffic patterns.

“To the extent that tariffs impact services spending, we’d expect discretionary services to take the biggest hit,” Bhave added.

Write to Sabrina Escobar at sabrina.escobar@barrons.com