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United States: Inflation rises in May but undershoots expectations
Latest reading: Inflation ticked up to 2.4% in May from April’s 2.3%. The reading was slightly above the Fed’s 2.0% target but was below market expectations. Price pressures for food and transport rose at faster paces in May.
Annual average inflation remained at April’s 2.7% in May. Meanwhile, core inflation was unchanged at April’s 2.8% in May, also below market expectations.
Lastly, consumer prices increased 0.08% in May over the previous month, a smaller increase than the 0.22% increase recorded in April.
Panelist insight: On the reading and outlook, TD Economics’ Thomas Feltmate said:
“On the surface, price pressures remained subdued in May. But looking under the hood, there’s already some evidence to suggest that tariff passthrough is underway. We expect prices pressures for consumer goods to heat up over the coming months, as businesses drawdown on existing inventory stockpiles and higher input costs start to squeeze profit margins. The push higher on goods prices is likely to eclipse the cooling in services inflation that is currently underway, leading to a turn higher in core inflation measures.”
