The U.S. Department of Labor reported on June 11, 2025, that the Consumer Price Index (CPI) increased by 2.4% year-over-year in May, slightly up from April’s 2.3% and aligning with economists’ expectations. On a monthly basis, the CPI rose by 0.1%, below the anticipated 0.2%. Core inflation, which excludes volatile food and energy prices, also saw a 0.1% monthly increase, maintaining an annual rate of 2.8% .
Despite concerns that recent tariffs imposed by the Trump administration would accelerate inflation, the data indicates that significant price increases have not yet materialized. Prices for items such as new and used vehicles, apparel, and gasoline declined in May, offsetting increases in other categories. Notably, the shelter index rose by 0.3% month-over-month and 3.9% year-over-year, continuing to be a primary driver of inflation .
Economists suggest that the muted impact of tariffs on consumer prices may be due to businesses preemptively stocking inventory and absorbing costs to remain competitive. However, as pre-tariff inventories deplete, companies may begin to pass increased costs onto consumers in the coming months .
In response to the inflation data, financial markets exhibited mixed reactions. While the S&P 500 and Nasdaq experienced slight declines, the Dow Jones Industrial Average remained relatively flat. Bond markets saw a rally, with the 10-year Treasury yield falling to 4.414% from 4.472% .
President Trump has publicly urged the Federal Reserve to implement interest rate cuts, citing the stable inflation figures as justification. While the Fed is expected to keep rates unchanged in its upcoming meeting, the current data provides it with flexibility to consider rate adjustments later in the year if inflation remains subdued and economic growth slows . wsj.com)
Looking ahead, economists will closely monitor upcoming data releases, including the Producer Price Index and the Personal Consumption Expenditures price index, to assess the ongoing impact of trade policies on inflation and inform monetary policy decisions.
