inflation experienced a modest increase of 0.1%, a figure that fell short of economists' expectations . This rise in consumer prices brings the annual inflation rate to 2.4%, up from 2.3% in April . The core Consumer Price Index (CPI), which excludes volatile food and energy prices, mirrored this trend by also rising by 0.1%. Despite these increases, both metrics were perceived as underwhelming compared to forecasts made prior to the release of this data.
United States have for months warned that they would raise prices on their customers in response to President Trump’s tariffs.
The latest data show that it is happening only in a limited way so far, helping to keep a lid on inflation.
The Consumer Price Index, released on Wednesday, rose 2.4 percent in May from a year earlier, just above April’s 2.3 percent annual increase.
“Core” inflation steadied at 2.8 percent. That measure, which strips out volatile food and energy products, is closely monitored by policymakers as a gauge for underlying price pressures.
CPI came in respectively at 0.1% and 2.8%, compared with forecasts for 0.3% and 2.9%. Federal Reserve officials consider core a better measure of long-term trends, with several expressing concerns recently over the impact that tariffs would have on inflation.
The all-items annual rate marked a 0.1 percentage point step up from April while core was the same.
Continued weakness in energy prices helped offset some of the increases, and a handful of other key items expected to show tariff-related jumps, vehicle and apparel prices in particular, actually posted declines.
Subdued inflation reflects a complex economy where external factors support price stability. Lower gasoline prices have eased consumer costs, though anticipated tariffs may increase future inflation, highlighting a divergence between short-term stability and long-term challenges.The labor market's resilience, marked by steady employment figures, contrasts with stagnant wage growth, limiting upward pressure on prices. The Federal Reserve's monetary policy navigates this landscape, balancing inflation targets with economic growth concerns. Geopolitical tensions and supply chain adjustments add layers of uncertainty, potentially disrupting the delicate equilibrium and posing risks to sustained price stability.
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