escalating prices across various goods and services, not merely tariffs, are causing inflation to surge
In a recent development, the Magnificent Seven – Apple, Amazon, Nvidia, Meta, Microsoft, Alphabet, and Tesla – have all reported their latest financial results. Meanwhile, the Personal Consumption Expenditures (PCE) price index, a measure of inflation, has been on the rise.
The current direction of inflation, as per the PCE index, is rising moderately above 2.5%. In June 2025, the annual increase reached 2.6%, up from 2.4% in May and 2.2% in April, indicating an accelerating inflation trend.
This rise in inflation is not due to imputed prices or a rogue, highly volatile price throwing off the index. Instead, it is driven by consumer behavior, wage-price dynamics, and external shocks.
Consumer spending has shown a modest increase, which tends to push prices higher as demand grows. Additionally, broader economic trends, such as a cooling labor market and cautious consumer spending patterns, are influencing inflation dynamics beyond tariffs.
Elevated short-run inflation expectations make it easier for workers to demand higher wages and businesses to charge higher prices, contributing to price persistence. Geopolitical risks and other unforeseen shocks, historically associated with inflationary pressure in the U.S., may also be contributing to upward price trends.
While tariffs have begun to filter through goods prices, their direct impact on the current inflation rise is delayed due to businesses’ inventory buffers, pricing strategies, and awaiting clearer tariff policies.
Among the Magnificent Seven, Nvidia has performed the best due to its high sales growth. Meta has the second-best performance, followed by Microsoft, Alphabet, and Amazon, who have similar performance and sales growth. Apple and Tesla, on the other hand, have poor sales growth and performance.
In the upcoming jobs report, the unemployment rate is the number to watch. For those interested in investment analysis and the week's key themes, subscribing to The Lex Newsletter offers insights by award-winning writers. Premium subscribers can receive the newsletter daily, while standard subscribers can upgrade to Premium or explore all FT newsletters.
In related news, the Due Diligence newsletter provides top stories from the world of corporate finance. The wide divergence in cash flow among the companies since the market bottomed in November 2022 does not seem to correlate with their performance.
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Jason Furman of Harvard argues that the rising inflation cannot be solely attributed to tariffs, a sentiment echoed in the current trends. As the situation evolves, it is essential to stay informed and understand the various factors influencing inflation.
- The rise in inflation, as indicated by the PCE index, has been influenced by a combination of consumer behavior, wage-price dynamics, and external shocks, with economists like Jason Furman of Harvard suggesting that tariffs may not be the sole cause.
- In the current financial climate, among the Magnificous Seven, Nvidia has shown the strongest performance, followed by Meta, Microsoft, Alphabet, and Amazon, with Apple and Tesla trailing behind in terms of sales growth.
- For those interested in financial markets and investment analysis, subscribing to the Due Diligence newsletter can offer insights into corporate finance, as it provides top stories and discusses factors such as cash flow divergence among companies.
