Overview

• The Consumer Price Index showed a 0.1% increase from April to May and an annual inflation rate of 2.4%, defying earlier projections of higher price growth.
• Economists warn that the effects of tariffs announced by President Trump have yet to be fully transmitted to consumer prices and could drive inflation above 3% later this year.
• Companies have accelerated imports before new levies take effect, a strategy that has so far muted tariff-driven cost increases.
• Government data indicate that households are reducing spending on nonessential goods while raising savings rates in response to higher prices.
• With uncertainty surrounding future price pressures, the Federal Reserve is expected to maintain its current interest rates at its June 17 meeting.