US inflation weaker than expected – again
US consumer prices in May rose more slowly than expected for the fourth month in a row.
Commerzbank Economic Research
06/11/2025
The data ...
US consumer prices rose by only 0.1% in May as compared to the previous month. The year-on-year rate rose from 2.3% to 2.4%. The more important core rate, which excludes volatile energy and food prices, was also 0.1% in month-on-month terms. The year-on-year core rate remained at 2.8%. Most economists had expected month-on-month rates of 0.2% (headline rate) and 0.3% (core rate).
... and the background
How are tariffs affecting US consumer prices? In May, some goods frequently imported from China saw above-average price increases. This applies, for example, to household appliances (+0.8%) and toys (+1.3%). In contrast, cars, which are heavily affected by tariffs, actually became cheaper (new vehicles -0.3%, used cars -0.5%). Overall, the price level for goods excluding energy and food remained virtually unchanged in May (Chart 1). These prices had already risen only marginally in April.
In addition, only weak price increases are observed for services. This may reflect the fact that wage growth has slowed and companies are seeing some relief in costs. Prices are also falling for some services that have been less in demand recently, such as flights (-2.7%) and hotel accommodation (-0.1%). In addition, rents are rising more slowly.
In the coming months, tariff-related price increases should have a stronger impact, partly because companies are still benefiting in some cases from inventories built up before the tariffs were introduced. However, the relatively low inflation figures seen in recent months reduce the risk of price increases getting out of hand. In May, we already lowered our inflation forecast for 2025 from 3.5% to 3.0%.
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