Inflation rose less than expected in May, with core consumer prices up just 0.1% for the month and 2.8% over the past year—the lowest annual increase in four years. Companies relied on existing inventories to avoid passing tariff-related costs to consumers, but some price increases are expected as inventories dwindle. The Federal Reserve is likely to keep rates unchanged in the near term, while easing trade tensions between the U.S. and China may further reduce inflation risks.
Key Takeaways
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Core inflation remains subdued, at its lowest annual rate in four years.
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Companies used stockpiled inventories to shield consumers from tariff-driven price hikes.
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The Fed is expected to maintain interest rates as trade negotiations continue.
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