In May 2025, the Consumer Price Index (CPI) increased by 2.5% compared to the same time last year. This is a slight rise from April's 2.3%. On a monthly basis, the CPI went up by 0.2%. This change reflects the early effects of new tariffs on imported goods, which began to influence prices in stores. Retailers had been selling older, lower-cost inventory, but now that newer shipments have arrived, prices are rising. While energy and food prices remained stable, items like appliances, clothes, and electronics saw small price hikes. These trends suggest a slow but steady rise in the cost of living, which may continue through summer.
Core Inflation Picks Up: Core CPI at 2.9%
Core CPI, which removes food and energy prices from the calculation, rose by 0.3% in May—its highest monthly increase in four months. Over the past year, core inflation reached 2.9%, up slightly from April’s 2.8%. This increase signals that inflation is not just limited to volatile items like fuel or groceries, but is spreading to everyday goods and services. Economists often look at core inflation to understand long-term price trends. The current rise is mostly due to costs being passed along from recent tariffs, and some experts warn that core prices might stay elevated if supply chain issues continue.
Tariffs on Imports Driving Price Increases
One of the biggest contributors to this month’s rise in inflation is the impact of new import tariffs. These added taxes on foreign goods are now showing up in the form of higher prices on everyday items such as washing machines, tools, and apparel. When tariffs were first announced earlier in the year, many stores still had cheaper inventory on hand. But as that stock has been sold, the newer, more expensive items have taken their place on shelves. This shift is causing a ripple effect across consumer prices. As long as the tariffs stay in place, inflation could keep rising slowly, especially in the retail and manufacturing sectors.
Fed Expected to Keep Interest Rates Steady
Despite the increase in inflation, most financial experts believe the Federal Reserve will keep interest rates unchanged in its next meeting. The current federal funds rate is between 4.25% and 4.50%. The Fed is closely watching inflation data but seems to view the current rise as a short-term effect of tariffs rather than a sign of lasting inflation. Because of this, it’s likely the Fed will wait for more data before making changes. Rate cuts that were once expected in early summer may now be delayed until fall. The central bank wants to avoid lowering rates too soon and fueling more inflation.
Staffing Shortages at BLS Affecting Data Collection
The Bureau of Labor Statistics (BLS), which collects CPI data, is currently facing staffing shortages. As a result, data collection in some cities has been reduced, and a few inflation-related reports have been paused. Despite these issues, officials at the BLS say the national CPI remains accurate and trustworthy. They use a range of methods, including estimates based on similar data, to ensure overall figures stay reliable. However, some regional details and product-specific data may not be as precise as before. Experts agree that while users should trust the national trends, caution is advised when interpreting local or industry-specific inflation rates.
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