What's happened
As of June 11, 2025, the Consumer Price Index (CPI) rose 2.4% in May, with core inflation steady at 2.8%. Despite concerns over tariffs, the impact on prices has been limited so far, with businesses cautious about passing costs to consumers. Analysts predict more significant price increases in the coming months.
What's behind the headline?
Current Inflation Dynamics
- The CPI rose 2.4% year-over-year in May, slightly above April's 2.3%.
- Core inflation, excluding food and energy, remained at 2.8%, indicating stable underlying price pressures.
Business Response to Tariffs
- Many companies have refrained from raising prices immediately, opting to absorb costs temporarily.
- Retailers like Walmart have warned of potential price hikes due to ongoing tariffs, suggesting that consumers may soon feel the effects.
Future Outlook
- Economists expect inflation to rise as businesses adjust to the higher tariff regime, particularly in sectors like clothing and appliances.
- The Federal Reserve is closely monitoring these developments, as persistent inflation could complicate monetary policy decisions moving forward.
What the papers say
According to the New York Times, the latest CPI data shows a modest increase, with core inflation steady at 2.8%. They note that businesses are currently hesitant to pass on tariff costs to consumers, which has kept inflation in check. In contrast, the Independent highlights that while some companies have absorbed costs, they anticipate that higher prices will emerge as tariffs remain in place. Bloomberg adds that the Federal Reserve is cautious, with officials indicating that they will maintain interest rates until they have a clearer understanding of the tariffs' impact on the economy. The NY Post emphasizes that the shelter index has been a significant driver of inflation, while car and apparel prices have seen declines, reflecting the complex interplay of tariffs and consumer demand.
How we got here
The recent inflation report follows the implementation of tariffs by the Trump administration, which aimed to protect domestic industries. However, the actual impact on consumer prices has been muted, as many businesses have delayed price increases amid uncertainty regarding trade policies.
Go deeper
- What are the main factors driving inflation right now?
- How are consumers likely to be affected by these price changes?
- What actions is the Federal Reserve considering in response?
Common question
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What Do the Latest US Inflation Figures Mean for Consumers?
With the recent Consumer Price Index showing a rise in inflation, many consumers are left wondering how this will impact their daily lives. Understanding the nuances of inflation, tariffs, and the Federal Reserve's response can help you navigate these economic changes. Here are some common questions people have about the current inflation trends in the US.
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