CPI in May has not increased strongly, it is predicted that the Fed will not rush to adjust interest rates
On June 11, data from the US Department of Labor showed that the country's consumer price index (CPI) increased only slightly in May. In this context, the US Federal Reserve (Fed) is expected to be in no hurry to adjust interest rates at its upcoming meeting.
On June 11, data from the US Department of Labor showed that the country's consumer price index (CPI) rose only slightly in May, largely due to lower gasoline prices. However, experts predict that inflation will likely increase sharply again in the coming months, due to the impact of the import tax policy of President Donald Trump's administration.
Specifically, the CPI in May increased by only 0.1%, lower than the 0.2% increase in April and also lower than analysts' forecasts. Compared to the same period last year, the CPI increased by 2.4%, slightly higher than the 2.3% increase in April but still below the forecast of 2.5%.
Core inflation, which excludes food and energy prices, also rose more slowly than expected, rising just 0.1% versus the forecast of 0.3%. Over the past 12 months, core inflation has been 2.8%, lower than the 2.9% expected by analysts.
This CPI report shows that housing prices were the main factor pushing up inflation (up 0.3%), while energy prices decreased 1.0% due to a slight drop in gasoline prices. Other groups such as food, medical services, and car insurance also had slight fluctuations.
While the CPI has not risen sharply yet, many economists believe that inflationary pressures will become more pronounced in the second half of the year. This is because most of the goods sold today are still imported before the tariffs were imposed. As new shipments of higher-cost goods enter the market, retail prices will begin to reflect the impact of the tariffs more clearly.
A typical example is Walmart, the largest retailer in the US, said it will start adjusting its selling prices from the end of May and in June.
In this context, the US Federal Reserve (Fed) is expected to be in no hurry to adjust interest rates at its upcoming meeting. The Fed is still carefully monitoring economic indicators, including inflation measures other than the CPI, to assess the possibility of changing monetary policy.
In addition, upcoming CPI data may be more or less affected because the US Bureau of Labor Statistics (BLS), the unit that collects and publishes this index, is facing a serious shortage of personnel.
Due to staff cuts and a hiring freeze, the BLS has announced it will stop collecting CPI data in three cities and will cut about 350 indexes in its producer price index (PPI) report starting next August.
Experts have expressed concern that the reduction in staff and changes in calculation methods could affect the accuracy of the data. However, the BLS asserted that the published indexes still adhere to strict measurement standards for bias, variability, and survey methodology. However, the agency did not comment directly on the staffing issue.
Erica Groshen, former head of the BLS, said the agency’s workforce has been reduced by at least 15%, and many furloughs are still being paid and are not reflected in official figures. She also acknowledged that the staffing shortage is affecting BLS’s operations.
Still, she considers the current CPI report to be reliable, especially because the BLS is pushing for electronic data collection instead of traditional methods.