The Consumer Price Index (CPI) report for May showed inflationary pressures have eased on a monthly basis, as investors watch closely for any signs that President Trump’s tariffs are starting to affect the prices consumers pay.
The latest data from the Bureau of Labor Statistics showed that the CPI rose 2.4% from a year earlier in May, slightly higher than the 2.3% increase in April, which was the slowest annual increase since February 2021.
On a monthly basis, prices rose 0.1%, lower than the 0.2% increase in April and also below economists’ expectations for a 0.2% increase.
For the “core” CPI (which excludes volatile food and energy costs), inflation rose 2.8% from a year earlier, the same as in April. The monthly increase in the core CPI was 0.1%, slightly lower than the 0.2% increase last month. Prior to this report, economists had expected core CPI to rise 2.9% annually and 0.3% monthly.
The report covers the period about a month after Trump’s “Liberation Day” tariff announcement that shocked markets and businesses. Since then, many of the “reciprocal” tariffs have been suspended, but the 10% base tariff rate on most countries remains in place.
Mexico and Canada continue to face fentanyl-related tariffs, while tariffs on specific sectors such as steel, aluminum and automotive remain unchanged. Tariffs on China also remain high despite a temporary truce that halted the massive increases, with the effective rate of tariffs on Chinese goods remaining around 30%.
Earlier Wednesday, the U.S. and China agreed to a framework and implementation plan to ease tariff and trade tensions. President Trump gave the green light, saying the deal was “done,” subject to final approval by him and Chinese President Xi Jinping.
