May’s Consumer Price Index (CPI) report for the month of May showed a slight easing of inflation pressures, contrary to concerns that President Trump’s tariffs would cause a rapid acceleration in price increases. The report, released by the Bureau of Labor Statistics, revealed that the CPI increased by 0.1% month over month, lower than April’s 0.2% rise and below economists’ expectations of a 0.2% gain in prices.
On an annual basis, CPI rose by 2.4% in May, a slight increase from April’s 2.3% gain, marking the lowest yearly increase since February 2021. The core CPI, which excludes volatile food and energy costs, rose by 2.8% over the past year in May, matching April’s figures. Monthly core prices increased by 0.1%, slightly lower than the 0.2% gain seen in April.
The report indicated that declines in car and apparel prices, categories expected to be impacted by tariffs, contributed to a lower-than-expected core CPI reading for the month. The data reflects a period following President Trump’s tariff announcements and subsequent market volatility. While some tariffs have been paused, the baseline duties of 10% for most countries remain in place. Mexico and Canada still face fentanyl-related tariffs, and industry-specific tariffs on steel, aluminum, and autos remain unchanged.
Despite the ongoing trade tensions, early reports suggest that the US and China have reached a consensus on a framework aimed at easing tariff and trade tensions. President Trump has signaled his approval of the deal, pending final sign-off from himself and Chinese President Xi Jinping.
Core inflation has remained elevated primarily due to stable costs for shelter and services like insurance and medical care. The shelter index rose by 3.9% over the last year and 0.3% over the previous month in May, contributing significantly to the overall monthly increase in prices.
While the report highlighted some areas of easing within the shelter category, other factors such as a drop in airline fares, used cars and trucks, new vehicles, and apparel also contributed to the lower core inflation figures for the month. Energy prices dropped by 1% month over month, with gas prices down by 12% year over year in May. Food prices, on the other hand, saw a reversal from the previous month, with the index rising by 0.3% in May.
Looking ahead, analysts will continue to monitor key indicators such as medical care, motor vehicle insurance, household furnishings, and recreation, which have seen notable increases over the past year. As the situation evolves, it is essential to stay informed and watch for updates on the latest developments in the financial markets.
This article was written by Allie Canal, a Senior Reporter at Yahoo Finance. For more updates and insights, follow her on Twitter at @allie_canal and visit her LinkedIn profile. Stay tuned for more breaking news and in-depth analysis on the stock market and financial news on Yahoo Finance.
