By Vince Golle and Craig Stirling
US consumers probably saw slightly faster inflation in May, notably for merchandise, as companies gradually pass along higher import duties.
Prices of goods and services, excluding volatile food and energy costs, rose 0.3% in May, the most in four months, according to a Bloomberg survey of economists. In April, the so-called core consumer price index climbed 0.2%.
US Consumer Prices Picking Up on Tariffs Spillover
Underlying inflation gauge probably accelerated in May
Note: Core CPI excludes food and energy
The measure, which is regarded as a better indicator of underlying inflation, is seen accelerating for the first time this year — to 2.9% — on an annual basis, based on the median projection.
Wednesday’s report, along with producer price data the following day, will offer Federal Reserve officials a final look at inflation and the impact of higher tariffs before they gather for a June 17-18 policy meeting.
What Bloomberg Economics Says:
“We expect a soft print for May’s CPI, with deflation in discretionary services more than offsetting firmer goods inflation. As the recent beige book flagged, some firms are passing through tariffs costs. We see partial pass-through in categories like furniture, apparel, and auto parts. But airfares are falling sharply, and hotels and recreational services are downshifting too.”
—Anna Wong, Stuart Paul, Eliza Winger, Estelle Ou and Chris G. Collins, economists. For full analysis, click here
Despite President Donald Trump’s efforts to jawbone central bankers into quickly lowering interest rates, Fed Chair Jerome Powell and his colleagues have indicated they have time to assess the impact of trade policy on the economy, inflation and job market.
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This article originally appeared here and was republished with permission.
