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17h ago

Tariffs Keep Goods Prices Flat but Lift Service Costs

The Federal Reserve is keeping interest rates at 4.25–4.50% to manage moderate inflation as tariff pressures persist.

U.S. President Donald Trump delivers remarks on tariffs in the Rose Garden at the White House in Washington, D.C., U.S., April 2, 2025. REUTERS/Carlos Barria/File Photo
Gantry cranes stand near shipping containers at Yangshan Port outside of Shanghai, China, on June 17.
US retail sales fell for a second straight month in May, suggesting anxiety over tariffs and personal finances prompted consumers to pull back after an early-year spending rush.

Overview

  • Consumer prices rose 2.4% in May year over year, modestly above April’s 2.3% gain and below economists’ projections.
  • Goods producers have drawn on pre-tariff stockpiles to maintain stable prices, but inventories are projected to run out by late summer.
  • Service-sector prices increased 3.7% year over year as firms passed on higher labor and operational costs.
  • Retailers including Walmart, Target and Home Depot have signaled upcoming price hikes to offset persistent tariff expenses.
  • Consumer sentiment plunged 32% in May, fueling cautious spending that has so far limited widespread price increases.