US inflation expected to pick up as Trump’s tariffs bite

From American consumers facing the return of price pressures, to China cementing new Asian trade corridors, to Argentina’s hard-won fight to tame hyperinflation, 2025 is proving a pivotal year for the global economy, Fresh data from official agencies, compiled by Bloomberg, reveals an increasingly fragmented landscape. While some economies maintain their footing, others are navigating headwinds from tariffs, soft demand, and persistent inflation.

US inflation edges higher as tariffs bite

Steep US tariffs are feeding through to consumers after months of relatively subdued price gains. Bloomberg’s latest survey of economists' points to a clear pick-up in June’s core consumer price index (CPI), excluding volatile food and energy.

As per Bloomberg, June 2025’s forecast rise of 0.3 per cent would be the fastest monthly increase in five months. Annual core inflation is also seen accelerating for the first time since January to 2.9 per cent.

Economists attribute the uptick to companies passing on higher costs from President Donald Trump’s tariffs on imported goods. Yet the Federal Reserve remains cautious about cutting interest rates too soon, worried that sustained pass-through will keep price pressures alive even as the labour market cools.

Policymakers meet again on July 29-30, with many watching closely whether tariffs force more businesses to hike prices despite wary consumers showing spending restraint.

China’s trade pivot deepens ties in Asia

Amid US tariff tensions, China is rapidly strengthening export channels to its Asian neighbours. Data from China’s General Administration of Customs, compiled by Bloomberg, show remarkable growth in shipments to ASEAN and other key partners.

As per Bloomberg, Chinese exports to ASEAN as a bloc have now topped $50 billion on a rolling annual basis, more than doubling since 2020. Vietnam alone has seen shipments climb to about $15 billion, triple its 2020 level.

This strategic reorientation is no accident. As the US ratchets up tariffs, threatening duties of up to 50 per cent on metals and other goods, China is solidifying regional supply chains to maintain its manufacturing dominance.

Analysts see this as part of a longer-term shift that will reshape global trade flows. Southeast Asia is both a market and a production partner, enabling China to “near-shore” certain stages of manufacturing while blunting tariff risk, as per Bloomberg.

UK growth remains fragile with production slump

Britain’s economy has been lurching from month to month, struggling to find sustained growth in the face of stubborn inflation, elevated borrowing costs and fiscal challenges.

According to Bloomberg, in May 2025, GDP grew a meagre 0.1 per cent, with services contributing the only meaningful boost. Production contracted yet again, continuing a pattern of weakness that has plagued British industry since the energy price shocks of 2022.

The numbers reflect an economy caught in limbo. While inflation is gradually retreating, headline CPI remains stubbornly above 3 per cent, interest rates remain high, damping business investment and household spending, as reported by Bloomberg.

Chancellor Rachel Reeves and Bank of England Governor Andrew Bailey have signalled cautious optimism, but markets remain alert to any further evidence that growth is stagnating even as public finances strain under higher debt servicing costs.

Brazil’s economic streak faces tariff headwinds

Latin America’s largest economy continues to outperform peers, posting its 16th straight quarter of expansion.

According to Brazil’s central bank proxy, May’s estimated year-on-year growth of around 2 per cent is slightly below its long-term average of 2.1 per cent but still represents a notable streak, as per Bloomberg.

According to Bloomberg, despite this resilience, the outlook is clouded by US trade tensions. President Trump’s threatened 50 per cent tariffs on imported metals could hit Brazil’s key export sectors hard. Analysts warn that a second-half slowdown or even a mild recession can’t be ruled out if such duties take effect.

High domestic interest rates, among the highest in emerging markets, are also squeezing credit and consumption. Yet for now, Brazil’s diversified economy and commodity exports have kept growth on track.

Argentina battles back from hyperinflation

Once among the world’s most notorious inflation stories, Argentina has achieved 14 straight months of disinflation thanks to President Javier Milei’s drastic fiscal reforms.

Annual inflation has plummeted from a crisis peak near 290 per cent in 2024 to below 40 per cent in mid-2025. June’s headline CPI is projected at 39.6 per cent, with monthly increases forecast at 1.8 per cent, up slightly from May’s 1.5 per cent, as per Bloomberg.

While the pace of disinflation has slowed, the improvement is striking. Milei’s administration slashed subsidies, reduced spending and allowed the peso to weaken, helping stabilise fiscal accounts and crush demand-driven price spirals.

Still, economists warn that long-term stability will require not only monetary discipline but also growth-boosting reforms. Argentina remains one of the world’s most volatile economies and the cost of this adjustment has been immense for ordinary citizens.

A world in flux

From the world’s largest economy facing tariff-driven inflation risks, to China remapping its trade routes, to Britain’s struggle for growth, to Latin America’s twin stories of resilience and recovery, the global economy in 2025 is anything but settled.