CPI inflation report May 2025: U.S. inflation rises 0.1%

Consumer prices in the United States rose less than expected in May, with President Donald Trump’s tariffs not yet showing a significant impact on inflation, according to a report from the Bureau of Labor Statistics. The consumer price index (CPI), a measure of goods and services across the U.S. economy, increased by 0.1% for the month, resulting in an annual inflation rate of 2.4%. This was slightly lower than the 0.2% increase and 2.4% annual rate that economists had predicted.

Excluding food and energy, the core CPI also rose by 0.1%, with an annual rate of 2.8%, which was below the forecasted 0.3% increase and 2.9% annual rate. Federal Reserve officials consider the core CPI a better measure of long-term trends, and there have been concerns about the impact of tariffs on inflation.

The report showed that energy prices continued to decline, offsetting some of the increases in other areas. Prices for new and used vehicles both decreased, as did gasoline prices. Food prices and shelter costs both increased by 0.3%, with shelter being the primary factor in the overall modest CPI increase. Apparel prices, on the other hand, posted a 0.4% drop.

Despite the rise in shelter prices, the annual increase of 3.9% was the lowest rate since late 2021. Real average hourly earnings increased by 0.3% for the month and were up 1.4% from a year ago.

Seema Shah, chief global strategist at Principal Asset Management, commented on the inflation data, stating that while the current numbers are reassuring, it is still too early to assume that the price shock from tariffs will not materialize in the future. Stock market futures reacted positively to the report, while Treasury yields decreased.

In a post on X, Vice President JD Vance echoed Trump’s calls for the Fed to cut interest rates due to the lack of inflation pressures. He referred to the Fed’s refusal to cut rates as “monetary malpractice.”

The ongoing trade tensions between the U.S. and other countries, particularly China, have added to the uncertainty surrounding inflation. The Trump administration’s tariffs and reciprocal duties have raised concerns about potential price increases, although the May inflation data suggests that the impact has been minimal so far.

The BLS report also highlighted changes in data collection methods, which have been affected by the Trump administration’s initiatives to reduce the federal workforce. The BLS has implemented a hiring freeze and expanded the use of imputation to fill in incomplete data. While these changes may lead to greater volatility in the data, the BLS stated that they will have a minimal impact on overall data collection.

In conclusion, the May inflation report shows that consumer prices in the U.S. rose less than expected, with tariffs not yet causing a significant impact on inflation. The data collection methods have been affected by the administration’s initiatives, but the overall impact on inflation remains to be seen.