Has the price increase wave started in the United States? Barclays: Retail is expected to start raising prices comprehensively from July!

The inflation pressure brought by Trump's tariffs is expected to become significantly apparent starting in July?

According to the latest news from the Chase Wind Trading Desk, Barclays cites NLP analysis and frontline market intelligence stating that U.S. retailers will begin to raise prices significantly from early July, focusing on the back-to-school shopping season. The report indicates that goods subject to 30% higher tariffs will arrive at U.S. ports by the end of June or early July and will start entering stores in late July for the back-to-school season, thus the broader tariff-related price increase effects will begin to manifest from June to July.

This will drive inflation to rebound in the second half of this year. Barclays stated that although the CPI data for May showed moderate performance, the price transmission effects caused by tariffs are about to become apparent, with core CPI expected to rise to 3.6% due to tariffs.

Almost all companies are discussing price increases and inventory reductions

The report shows that NLP analysis of earnings call transcripts for S&P 1500 companies found that discussions on tariffs and trade accounted for about 90% of the call records during the Q2 2025 reporting season, far exceeding historical levels since 2002. On average, "trade" and "tariff" were mentioned more than 12 times in each call.

Notably, discussions around "price" and "price increase" have become more prominent, bringing the coverage rate for Q2 2025 to 78%, nearly matching the peak of 79% at the end of 2008 and early 2009. Corporate executives are more frequently describing prices as "high" or "increasing," while mentioning "low" or "competitive" prices less often.

The net value of such price discussions ("high" minus "low") has a strong correlation with the year-on-year change in headline CPI (quarterly average), with a correlation coefficient of 0.77, indicating that price increases may be imminent.

At the same time, the accumulation of inventory by many companies may lead them to delay immediate price increases in order to first digest their stock. Discussions describing inventory as "more," "increasing," "rising," "extra," or "incremental" have increased, while the coverage rate for discussions about inventory decreasing or being "lower" has declined compared to the previous quarter.

According to the report, Walmart was the first major retailer to indicate the need to raise prices to help alleviate the impact of tariff costs, stating that these costs would start to flow in from the end of May and be more comprehensively transmitted in June. Subsequently, most investment-grade retailers indicated that price increases would be a last resort and are considering other mitigation measures.

Starting in July, the back-to-school season and holiday season will see a wave of price increases

Based on the timing of order flows, Barclays expects that goods subject to 30% higher tariffs will arrive at U.S. ports by the end of June or early July and will start entering stores in late July for the back-to-school season. Although some direct-to-consumer online sellers began raising prices as early as April, such actions have been relatively limited compared to the broader retail landscape Therefore, the broader tariff-related price increase effects are expected to become apparent from June to July.

The upcoming back-to-school season is likely to see widespread price increases in the U.S. retail industry, with inflationary pressures stemming from tariffs that begin in early July (set to take effect the week of July 4) and fully implemented before the tax-free holiday and back-to-school sales season in early August.

Inflationary Pressures Surge

Barclays' economic research department states that the dominant factor in U.S. inflation forecasts this year will be tariffs, estimating that the U.S. trade-weighted tariff rate has jumped from 2.5% at the beginning of the year to about 14-15%, increasing import costs by 12 percentage points.

The report believes that despite the weak CPI data in May raising doubts, the baseline assumption is that about 50% of these additional costs will be passed on to end consumers through higher retail prices.

This will raise core inflation by about 70 basis points this year, with core CPI inflation expected to accelerate starting in June, peaking in early autumn due to tariff effects, resulting in a core CPI inflation rate of about 3.6% by the end of the year.

The Federal Reserve's surveys also support these assumptions.

The New York Fed survey found that about 75% of businesses in the three-state region plan to pass on some of the tariff-related costs to consumers, with nearly half indicating a pass-through rate of 50% or higher. Similarly, the Atlanta Fed survey found that businesses are able and willing to pass on an average of 50% of cost increases to prices without reducing current demand levels