Tariffs seen lifting underlying US consumer prices in May

US consumer prices likely increased moderately in May amid relatively cheaper gasoline, but the Trump administration's import tariffs probably started filtering through to other goods, potentially raising underlying inflation pressures.

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The Consumer Price Index (CPI) report from the labour Department on Wednesday could show the CPI less the volatile food and energy components rising by the most in four months. Economists said the increase in the so-called core CPI would be attributable to higher prices from President Donald Trump's sweeping import duties. May would mark the start of tariff-related high inflation readings that could last through year end, they said.

Walmart last month said it would begin raising prices in late May and June.

Economists said inflation has been slow to respond to tariffs as most retailers were selling merchandise accumulated before the duties took effect.

"Retailers showed remarkable restraint in April," said Stephen Stanley, chief US economist at Santander US Capital Markets. "May should bring the leading edge of price increases, with the maximum impact coming in June and July."

The CPI likely increased 0.2 per cent last month after advancing by the same margin in April, a Reuters survey of economists showed.

Gasoline prices were mostly lower in May as concerns over global economic growth curbed crude oil prices.