May Inflation Report: Price Growth Remains Steady Amid Trump’s Unpredictable Trade War

Inflation remained relatively steady in May, with some data indicating an unexpected cooling of price growth. According to the Bureau of Labor Statistics, the Consumer Price Index (CPI) increased by 2.4% compared to the previous year, slightly up from 2.3% in April.

Monthly prices rose just 0.1%, which fell short of economists’ expectations of 0.3% and was less than April’s 0.2% increase. The measure of “core” inflation, which excludes volatile food and energy prices, also rose by 0.1%, slowing from the 0.2% increase seen in April.

Annual core inflation held steady at 2.8%. Notably, unexpected declines in prices for apparel, cars, and furniture—categories heavily influenced by tariffs—helped bring the index down.

Some analysts warned that it may still be premature to draw conclusions about the broader impact of tariffs on consumer prices. Seema Shah, chief strategist at Principal Asset Management, highlighted that the effects of tariff-driven price increases may take time to fully materialize, suggesting that we might have to wait until late summer to see their impact on inflation figures.

In response to the CPI report, stock futures rose, and U.S. government borrowing rates decreased. Vice President JD Vance renewed calls for the Federal Reserve to lower interest rates, describing the failure to do so as “monetary malpractice.”

President Trump’s tariffs have created uncertainty among businesses and consumers alike, contributing to declining consumer confidence since April. Companies like Walmart have begun signaling that shoppers will soon see higher prices, and a growing number of small businesses have indicated plans to raise prices.

Analysts believe that while there may be temporary relief due to an overall slowing economy and reduced consumer spending, future months will likely reflect the full impact of tariffs, as previous tariffs took time to show effects in data. Even if inflation rates are not as high as in 2022, experts warn that consumers will still feel the ongoing pressure from rising prices.