(CTN News) – Consumer prices rose less than expected in May because Trump’s tariffs didn’t affect inflation.

A 0.1% monthly increase in the consumer price index, which measures product and service quality in the US, caused 2.4% yearly inflation. Dow Jones stated economists predicted 0.2% and 2.4% gains.

The core CPI was 2.8% and 0.1%, excluding food and energy, versus 2.9% and 0.3% expected. Federal Reserve experts suggest that long-term trends could be measured more effectively. Tariffs may affect inflation, according to current concerns.

In April, the all-items annual rate rose 0.1 percentage points, while the core rate remained steady. Energy price drops reduced certain benefits. Despite levies, car and clothing costs fell.

New and used car costs fell 0.3% and 0.5%, while energy prices fell 1%. Gas prices fell 2.6%, and the energy industry fell 12% from last year. The Bureau of Labor Statistics (BLS) cited a 0.3% increase in food and shelter prices as the “primary factor” in the minor CPI increase. Despite a 2.7% drop, egg prices are 41.5% higher than a year ago.

Clothes fell 0.4%. The 3.9% annual growth rate is the lowest since late 2021, despite monthly house price increases.

Inflation increased real hourly wages by 1.4% and 0.3% respectively.

“The current inflation report is reassuring—albeit to a limited extent,” says Principal Asset Management Chief Global Strategist Seema Shah. “We should not assume that the price shock will not occur imminently, as tariff-induced price escalations may take several months to be reflected in the CPI data.”

Data shows Treasury rates fell and stock market futures rose.

Vice President JD Vance endorsed Trump’s request to lower the Federal Reserve’s X interest rates due to low inflation. Vance said, “Monetary malpractice is the result of the Federal Reserve’s inability to lower interest rates.” After much explication, the president’s point is clear.

Trade conflicts that linger

Following BLS data, Trump negotiates trade pacts. Trump’s April 2 “liberation day” declaration, which included a 10% global tariff on U.S. imports and other retaliatory actions against unfair trade practices, stunned financial markets.

White House and Chinese officials discussed the trade war. The two countries’ presidents have hinted at an accord on rare earth technologies and materials for car batteries.

Trump gave nations facing reciprocal penalties until early July, one week after the original action, to discuss.

White House officials claimed that foreign producers would contribute heavily and that tariffs would not cause inflation. Numerous analysts have anticipated that the levies will raise costs, but their full impact may not be apparent until summer, when stockpiles begin to drop.

Goldman Sachs Asset Management global chief investment officer of multi-asset solutions Alexandra Wilson-Elizondo says the tariffs are not having a significant immediate impact because companies are using their inventories or adjusting their prices to meet uncertain demand. favorable.

Since service prices are expected to remain stable despite product price increases, inflation may rise momentarily. Market pricing suggests officials may delay interest rate cuts until September to analyze tariffs’ impact on inflation. Trump wants the Fed to lower rates when inflation rises and employment falls.

Enhancing data-gathering methods

Trump’s policies have made inflation statistics analysis harder.

Since the federal government banned employment to save money, the Bureau of Labor Statistics has curtailed data collecting and relied more on imputation to fill data gaps. The Bureau of Labor Statistics (BLS) stopped collecting data in Buffalo, New York; Provo, Utah; and Lincoln, Nebraska, on Monday after “reducing samples in areas across the country” since April.

Prolonged imputation may result from BLS staff scarcity. BNP Paribas analysts said it’s difficult to spot a trend in smaller samples, despite their chaotic nature.

The Bureau of Labor Statistics (BLS) says stopping data collection will have a “minimal impact” on data collection overall but may influence subindices.

SOURCE: CNCB