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Annual inflation rates increased slightly in May as rising food inflation rates at Gasoline Pump somewhat offset slightly lower prices.
Although inflation was relatively tame, economists said they hope that President Trump’s tariff policies will raise consumer prices in the coming months, and there is already evidence of their impact.
The consumer price index, an inflation barometer, rose 2.4% in the 12 months to May, up from 2.3% in April, the Bureau of Labor Statistics said Wednesday.
“Calm down before the inflation storm”
The increase in annual inflation was largely due to data habits called “base effects,” according to Economists. (Essentially, inflation was unusually low a year ago in May 2024, and the numbers for May 2025 looked higher than they were compared.)
Monthly inflation rates draw a more rosy picture and provide a better indicator of underlying trends, the economist said: CPI increased by 0.1% from April to May, and fell to 0.2% from the previous month, BLS said.
According to economists, a consistent monthly rate of approximately 0.2% is generally sufficient to lower inflation to the long-term Federal Reserve targets.
“It was a very good report,” said Mark Zandy, chief economist at Moody’s. “Essentially, they say that inflation has finally returned to the Federal Reserve annual inflation target.”
However, he said that tariff presidents will be collected in many countries and the products will begin to appear prominently in the summer and fall.
“I think inflation is calm before the storm,” Zandi said. “this [report] It still reflects the decomposition that began a few years ago and continued until May. ”
Tariffs affect energy prices
That said, tariffs in May have already had some impact on consumer prices, the economist said.
First, gasoline prices fell almost 3% between April and May, according to BLS. They said it has fallen 12% from a year ago.
This is primarily a result of a fall in oil prices and reflects concerns about a slower global economic growth due to tariffs, said Bernard Jaros, the head of the US economist at Oxford Economics.
The decline in energy prices will filter gasoline pumps and lower household bills, he said. In categories such as airline fares, lower oil prices also reduce transportation costs and reduce more widely.
According to BLS, airfares fell by about 3% between April and May, down 7% per year.
According to economists, grocery prices were a sticking point in May. Food inflation at home increased by 0.3% that month after shrinking 0.4% the previous month.
Zandi said he “feels a bit bad” about food prices. It’s one of the categories he worries most, he said.
Other disinfectant factors
Sarah House, a senior economist at Wells Fargo Economics, said the weakening of the healing supply chain and labor market was a factor that has significantly curtailed US inflation.
The data shows that consumers continue to spend their money and are less resistant to accepting higher prices, House said.
“Consumers haven’t buckled yet,” she said.
Economists say that the category is the biggest component of the consumer price index, so housing inflation has also been eased.
In fact, Stephen Brown, Stephen Brown, North American Economics Head of Capital Economics, wrote in a research note on Wednesday that “rent measures” for rent and “performing owner-equal rent” (rent measures applicable to homeowners) “returned to pre-pandemic norms.”
These trends indicate a “stable decline in inflation” that goes back to the Fed’s long-term targets at least until the end of this year or early next year, said Yaros of Oxford Economics.
Customs risk is “stop”
The tariffs complicate the story, the economist said.
“The disinflation trend we’ve seen in fit and start is at risk of halting again,” House said.
Since taking office in January, President Trump has been collecting a barrage of import obligations.
Federal data states that the effective tariff rate in April was about 6% compared to the 2% at the end of 2024, and is likely to increase, House said.
Yale Budget Lab estimates that in 2025, average US households will pay around $2,500 in 2025, due to their customs policy as of June 1.
Brown wrote in the May CPI report for people “through the microscope” and “through the microscope” there were some early signs of the impact of tariffs.
For example, citing CPI data, the prices of major appliances rose 4.3% for the month and toy prices rose 2.2%.
“Unless all retailers raise prices at the same time, it may not be data-rich,” wrote Elizabeth Renter, senior economist at Nerdwallet.
