CPI Data Today: Inflation Rises to 2.4% in May
The CPI data today shows that inflation is rising, but at a slower pace than expected, with core inflation also below expectations. The Federal Reserve's next move on interest rates will be crucial in determining the future of inflation and the economy.
The Bureau of Labor Statistics released the May consumer price index (CPI) report, showing a 2.4% year-over-year (YoY) inflation rate, lower than the 2.5% expected by economists, with the month-over-month (MoM) inflation rate at 0.1%, also below the 0.2% forecast.
Economists had expected inflation to rise to 2.4% in May, a 0.1% increase from April's 2.3%, which would be the highest inflation rate since 2021, but still below the Federal Reserve's 2% target. The increase is attributed to President Trump's tariffs, which have been dialed back in recent weeks, but remain in place for many goods.
Retailers like Walmart and Best Buy are warning of potential price hikes, and the OECD expects US inflation to reach 4% by the end of 2025. Federal Reserve Chair Jerome Powell has warned of the possibility of stagflation, a combination of rising inflation and economic slowdown, which could put the central bank in a difficult position.
The Fed has opted to keep interest rates steady for now, but will make its next decision on June 18. Core inflation, which excludes food and energy, rose 2.8% YoY and 0.1% MoM, both below expectations. The lower-than-expected inflation rate may give the Fed room to maneuver, but the ongoing trade tensions and potential price hikes remain a concern.
As the inflation rate continues to rise, consumers and businesses are bracing for potential price hikes and economic slowdown. The Federal Reserve's next decision on interest rates will be closely watched, as it will have a significant impact on the economy and inflation rate.