In May, U.S. consumers likely saw a slight increase in inflation, particularly in the goods sector, as companies began passing on the high costs of import tariffs to consumers. Economists predict that, excluding volatile food and energy prices, goods and services prices rose by 0.3% compared to the previous month, marking the largest increase in four months. In April, the core Consumer Price Index (CPI) rose by 0.2% month-over-month.
Federal Reserve officials will use the upcoming inflation report and the following day's Producer Price Index (PPI) data to evaluate the inflation trend and the impact of tariffs before their policy meeting. Despite pressure from U.S. President Trump for rapid rate cuts, Fed Chairman Powell and colleagues suggest they have time to assess how trade policies affect the economy, inflation, and the job market. Currently, Fed officials are in a "quiet period" before the policy meeting.
Beyond inflation data, markets are closely monitoring weekly initial jobless claims for signs of labor market stress. Recent data showed claims rising to the highest level since October last year. However, the non-farm payroll report indicates that while job growth has slowed, it remains robust.
