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Tariffs

Cooler Inflation Trends Continue Despite Trade War Fears

Strategic Insights

— 1 min read

Cooler inflation trends have continued for the fourth straight month, with the Bureau of Labor Statistics reporting a 0.1% increase in the overall Consumer Price Index and the core gauge in May. This slowdown is despite fears that President Trump's tariffs would reignite inflation. Economists project that the tariffs will eventually have an impact, but so far, the effects are not apparent in official economic data. The White House has touted the lower inflation rates as a success, but Wall Street economists are not convinced, expecting higher tariffs to show up in inflation reports down the line.

Key Takeaways:

  • The Consumer Price Index rose 0.1% in May, continuing a four-month streak of slower inflation trends.
  • The core gauge also rose 0.1%, down from the 0.2% increase in April.
  • Auto and apparel prices fell in May, among other categories.
  • The 12-month inflation rate rose 2.4% in May, up from 2.3% in April.
  • Core CPI, excluding food and energy costs, rose 2.8%, the same as in April.
  • The government compiled the inflation data in May, when the Trump administration ended the trade embargo and China brought the tariff rate down to 30% from 145%.
  • The Trump administration announced a framework to push the previous deal forward and ease shortages of critical rare earth minerals.
  • Economists expect higher tariffs to show up in inflation reports down the line as businesses work through goods stockpiled before tariffs took effect.
  • The Federal Reserve begins a two-day policy meeting next week, with no change to interest rates expected.

Statistics:

  • 0.1%: Monthly increase in the overall Consumer Price Index and the core gauge in May.
  • 2.4%: Year-over-year increase in CPI in May.
  • 2.3%: Year-over-year increase in CPI in April.
  • 30%: Tariff rate for Chinese imports after the recent deal.
  • 145%: Original tariff rate for Chinese imports.
  • 12 months: Time period for the year-over-year inflation rate.
  • 0.2%: Monthly increase in the overall Consumer Price Index and the core gauge in April.
  • 2.8%: Core CPI, excluding food and energy costs, in May.

Sources:

  • Axios:

+ "Economy"

+ 2025/06/09: "Inflation Trump tariffs China trade"

+ 2025/06/03: "Trump tariffs pause federal court Apple"

+ 2025/05/07: "China Trump tariffs"

+ 2025/06/11: "US China trade tariffs"

+ 2025/06/11: "Trump US China trade talks minerals"

+ "Federal Reserve"

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