Inflation Resumes Climb In May, But Tariffs Have Yet To Hit Consumers

by Piero Cingari Benzinga Staff Writer

Zinger Key Points

U.S. inflation rose to 2.4% in May, ending a four-month streak of easing price pressures. The outcome missed economist expectations of 2.5%.
Excluding food and energy, core inflation remained at 2.8% year-over-year, falling short of expectations of a rise to 2.9%.
9 Out of the Last 10 Summers this "Power Pattern" Delivered Winners - Get The Details Now.

Inflation resumed its climb in May, snapping a four-month streak of easing price pressures, yet rising input costs from tariffs failed to significantly spill into consumer prices.

The annual rate of increase in the Consumer Price Index (CPI) was 2.4% last month, marking a slight acceleration compared to the 2.3% surge in April, the Bureau of Labor Statistics showed Wednesday.

The outcome missed economist expectations of 2.5%. Prior to the inflation data, traders had priced in a cumulative 35 basis points of interest rate cuts by year-end.

On a monthly basis, the CPI basket rose by just 0.1%, decelerating from April’s 0.2% and below economist forecasts.

Excluding food and energy, core inflation remained at 2.8% year-over-year, falling short of expectations of a rise to 2.9%.

Monthly core prices rose 0.1%, decelerating from April's 0.2% increase and missing the projected 0.3% rise.

Indexes that rose in May included medical care, motor vehicle insurance, household furnishings, personal care, and education. In contrast, airline fares, used and new vehicle prices, and apparel declined. The energy index fell 1.0% following a 0.7% gain in April, with gasoline prices down 2.6% month-over-month.

Inflation measure	May 2025	Previous	Expected
CPI YoY	2.4%	2.3%	2.5%
CPI MoM	0.1%	0.2%	0.2%
Core CPI YoY	2.8%	2.8%	2.9%
Core CPI MoM	0.2%	0.2%	0.3%

Market Reactions

A lower-than-expected inflation print may continue to fuel investor sentiment on Wednesday, which was also bolstered by optimism around U.S.-China trade talks.

President Donald Trump announced on Truth Social that a deal with China has been reached, awaiting final sign-off from President Xi Jiping and himself.

U.S. equity futures rose in premarket trading, with S&P 500 contracts up 0.5% and Nasdaq 100 futures rising 0.6% as of 8:39 a.m. ET.

On Monday, the Vanguard S&P 500 ETF VOO closed at $554.39, just 1.6% below its record high.

Meanwhile, the U.S. dollar index—as tracked by the Invesco DB USD Index Bullish Fund ETF UUP—fell 0.4%.

Read Next: