US consumer prices rise in May, inflation expected to accelerate

US consumer prices increased less than expected in May as cheaper gasoline partially offset higher rents, but inflation is expected to accelerate in the coming months on the back of the Trump administration's import tariffs.

- 

The report from the labour Department also showed underlying price pressures muted last month. Economists say inflation has been slow to respond to President Donald Trump's sweeping tariffs as most retailers are still selling merchandise accumulated before the import duties took effect.

Walmart last month said it would start raising prices in late May and June. Inflation was also being curbed by slower price rises for services, including subdued airline fares. The Federal Reserve is expected to keep interest rates unchanged next Wednesday, with financial markets optimistic of a resumption in monetary policy easing in September.

“This report is another indicator that, before tariffs and economic uncertainty, we were well on our way to inflation falling back to target and that the main impediment to future progress is tariff-related price increases,” said Daniel Hornung, a senior fellow at MIT.

The Consumer Price Index (CPI) increased O.I per cent last month after rising 0.2 per cent in April, the labour Department's Bureau of labour Statistics (BLS) said. Economists polled by Reuters had forecast the CPI climbing 0.2 per cent.