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Key inflation gauge rose last month while Americans cut back on spending
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....ey inflation gauge rose last month while Americans cut back on spending<BR>PTI News<BR>Dated:- 27-6-2025<BR>PTI<BR>Washington, Jun 27 (AP) A key inflation gauge moved higher in May in the latest sign that prices remain stubbornly elevated while Americans also cut back on their spending last month. Prices rose 2.3 per cent in May compared with a year ago, up from just 2.1 per cent in April, the Co....
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....mmerce Department said Friday. Excluding the volatile food and energy categories, core prices rose 2.7 per cent from a year earlier, an increase from 2.5 per cent the previous month. Both figures are modestly above the Federal Reserve's 2 per cent target. The Fed tracks core inflation because it typically provides a better guide to where inflation is headed. At the same time, Americans cut back o....
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....n spending for the first time since January, as overall spending fell 0.1 per cent. Incomes dropped a sharp 0.4 per cent. Both figures were distorted by one-time changes: Spending on cars plunged, pulling down overall spending, because Americans had moved more quickly to buy vehicles in the spring to get ahead of tariffs. And incomes dropped after a one-time adjustment to Social Security benefits....
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.... had boosted payments in March and April. Social Security payments were raised for some retirees who had worked for state and local governments. The inflation figures suggest that President Donald Trump's broad-based tariffs are still having only a modest effect on prices. The costs of some goods, such as toys and sporting goods, have risen, but those increases have been partly offset by falling ....
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....prices for new cars, airline fares, and apartment rentals, among other items. On a monthly basis, in fact, inflation was mostly tame. Prices rose just 0.1 per cent in May from April, according to the Commerce Department, the same as the previous month. Core prices climbed 0.2 per cent in May, more than economists expected and above last month's 0.1 per cent. Economists point to several reasons f....
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....or why Trump's tariffs have yet to accelerate inflation, as many analysts expected. Like American consumers, companies imported billions of dollars of goods in the spring before the duties took full affect, and many items currently on store shelves were imported without paying higher levies. There are early indications that that is beginning to change. Nike announced this week that it expects US....
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.... tariffs will cost the company USD 1 billion this year. It will institute “surgical” price increases in the fall. It's not the first retailer to warn of price hikes when students are heading back to school. Walmart said last month that that its customers will start to see higher prices this month and next as back-to-school shopping goes into high gear. Also, much of what the US imports is mad....
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....e up of raw materials and parts that are used to make goods in the US. It can take time for those higher input costs to show up in consumer prices. Economists at JPMorgan have argued that many companies are absorbing the cost of the tariffs, for now. Doing so can reduce their profit margins, which could weigh on hiring. Cooling inflation has put more of a spotlight on the Federal Reserve and its ....
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....chair, Jerome Powell. The Fed ramped up its short-term interest rate in 2022 and 2023 to slow the economy and combat inflation, which jumped to a four-decade high nearly three years ago. With price increases now nearly back to the Fed's target, some economists — and some Fed officials — say that the central bank could reduce its rate back to a level that doesn't slow or stimulate growth. Tru....
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....mp has also repeatedly attached the Fed for not cutting rates, calling Powell a “numskull” and a “fool.” But Powell said in congressional testimony earlier this week that the Fed wants to see how inflation and the economy evolve before it cuts rates. Most other Fed policymakers have expressed a similar view. (AP) GSP<BR> News - Press release - PIB....