U.S. inflation rises 0.1% in May from prior month, less than expected

Consumer prices rose less than expected in May as President Donald Trump’s tariffs had yet to show significant impact on inflation, the Bureau of Labor Statistics reported Wednesday.

The consumer price index, a broad-based measure of goods and services across the sprawling U.S. economy, increased 0.1% for the month, putting the annual inflation rate at 2.4%. Economists surveyed by Dow Jones had been looking for respective readings of 0.2% and 2.4%.

Excluding food and energy, core CPI came in respectively at 0.1% and 2.8%, compared to forecasts for 0.3% and 2.9%. Federal Reserve officials consider core a better measure of long-term trends, with several expressing concerns recently over the impact that tariffs would have on inflation.

The all-items annual rate marked a 0.1 percentage point step up from April while core was the same.

Continued weakness in energy prices helped offset some of the increases, and a handful of other key items expected to show tariff-related jumps, vehicle and apparel prices in particular, actually posted declines.

Energy slipped 1% on the month, while new and used vehicle prices posted respective declines of 0.3% and 0.5%. Within energy, gasoline posted a 2.6% drop that took the year-over-year decrease to 12%.

Food increased 0.3% as did shelter, which the BLS said was the “primary factor” in the otherwise modest CPI increase. Egg prices fell 2.7% but were still up 41.5% from a year ago. Apparel posted a 0.4% drop.

Though shelter prices rose on the month, the 3.9% annual increase is the lowest rate since late-2021.

With the modest inflation moves, real average hourly earnings increased 0.3% for the month and were up 1.4% from a year ago.

“Today’s below forecast inflation print is reassuring – but only to an extent,” said Seema Shah, chief global strategist at Principal Asset Management. “Tariff-driven price increases may not feed through to the CPI data for a few more months yet, so it is far too premature to assume that the price shock will not materialize.”

Stock market futures turned positive after the report while Treasury yields were lower.

Echoing Trump, Vice President JD Vance, in a post on X, called on the Fed to cut interest rates as inflation pressures have failed to materialize.

“The president has been saying this for a while, but it’s even more clear: the refusal by the Fed to cut rates is monetary malpractice,” Vance wrote.