An important inflation current in May in May in the last sign that prices remain stubbornly increased, while the Americans also reduced their expenses last month.
The prices rose by 2.3% in May compared to a previous year, compared to 2.1% in April, the trade department said Friday. Without the volatile categories for food and energy, core prices rose by 2.7% compared to the previous year, which has an increase of 2.6% in the previous month. Both numbers are modest above the 2% destination of the Federal Reserve. The FED pursues the core inflation because it usually offers better instructions for inflation.
At the same time, the Americans have been lowering the expenses for the first time since January because total expenses fell by 0.1%. Income dropped a sharp 0.4%. Both numbers were distorted by unique changes: expenses for cars plunged, the total expenses, since the Americans bought vehicles faster in the spring to be ahead of the tariffs.
And the income decreased after a one -time adjustment of social security benefits that the payments had increased in March and April. For some pensioners who had worked for state and local governments, payments for social security were made.
Nevertheless, the data indicates this growth cool Because the Americans are more careful, partly because President Donald Trump’s tariffs have increased the costs for some goods such as devices, tools and audio devices. Consumer feeling also has fell very much this year After the sometimes chaotic rollout of the duties. And while the unemployment rate is still low, the setting was weak, so that those without jobs struggle to find new work.
Consumer expenditure rose only by 0.5% in the first three months of this year and were sluggish in the first two months of the second quarter.
And the expenditure for services rose only 0.1% in May, with the smallest Montligen increase in four and a half years.
“Since consumers are not sufficient to cope with them (higher prices), they give less for relaxation, travel, hotels and this kind of things,” said Luke Tilley, chief economist at Wilmington Trust.
The expenses for flight prices, restaurant meals and hotels fell last month, as the report on Friday showed.
At the same time, the figures indicate that President Donald Trump von wide tariffs still only have a modest impact on total prices. The increasing Costs of some goods were partially compensated for by falling prices for new cars, flight prices and apartment rents.
In fact, inflation was mostly tame monthly. According to the trade department, prices rose by only 0.1%in May in May in May, just like in the previous month. Core prices rose by 0.2%in May, more than economists and over the past month by 0.1%. Gas prices decreased by 2.6% from April to May.
Economists indicate several reasons why Trump’s tariffs do not yet have to accelerate inflation, as many analysts expected. How American consumers imported companies in the spring were billions of dollars before the tasks have a full impact, and many objects have currently been imported on the shelves without paying higher taxes.
There are early signs that this begins to change.
Nike announced this week that the US tariffs will cost the company 1 billion US dollars this year. “Surgical” price increases will be introduced in autumn. It is not the first retailer for Warn before price hikes When the students return to school.
Walmart Last month said that his customers will start higher prices this month and next when shopping at school is in full swing.
In addition, a large part of the US imports are made of raw materials and parts used to manufacture goods in the USA. It can take some time before these higher input costs are displayed in the consumer prices. Economists from JPmorgan have argued that many companies will initiate the costs of the tariffs for the time being. This can reduce your profit margins what the attitude weighs.
The cooling inflation has faced Rather a headlight for the Federal Reserve And his chairman Jerome Powell. The FED increased its short-term interest rate in 2022 and 2023 to slow down the economy and the fight against inflation, which increased almost three years ago to a four-decade high. With price increases now almost back to the goal of the Fed, some economists – and Some fed officials – Say that the central bank could reduce its interest rate to a level that does not slow or stimulate growth.
Trump has repeatedly attached the Fed because he did not lower the tariffs and called Powell as a “Numskull” and a “fool”.
But Powell said in the congress statement At the beginning of this week, the Fed wants to see how inflation and economy develop before it lowers interest. Most of the other political decision -makers of the FED have expressed a similar view.
