US Inflation Rises Amidst Trump’s New Tariffs

WASHINGTON — U.S. inflation rose slightly last month as prices for groceries, toys, and major appliances increased. In May, consumer prices were up 2.4% compared to a year prior, according to the latest report from the Labor Department, released Wednesday. This marks an uptick from April’s annual increase of 2.3%.

Housing and grocery prices continued to rise, but were balanced out by decreases in costs for gasoline, airline tickets, and clothing. Analysts are closely watching this report to gauge the impact of President Donald Trump‘s recent tariffs on imports.

Since January, Trump has imposed a 10% tariff on various imports while targeting specific goods from certain countries with even higher duties. Economists warn these tariffs could lead to increased costs for businesses and higher prices for consumers, reigniting inflation concerns. However, the White House claims that foreign companies will absorb the new costs, benefiting American producers.

According to the inflation report, prices for major appliances surged 4.3% over the month, while toys saw an increase of 2.2%. In total, overall prices rose just 0.1% from April to May, a decrease from the 0.2% increase the previous month.

Seema Shah, chief global strategist at Principal Asset Management, noted that while the latest inflation figures are somewhat reassuring, it may be premature to conclude that tariff-driven price hikes will not materialize in the near future.

The Federal Reserve aims for an inflation rate of around 2%. After significantly raising interest rates in 2022 to control rising prices, the Fed has made only limited cuts since. With some uncertainty still present, analysts suggest the Fed may hold off on major decisions regarding interest rates until they see how tariffs influence inflation this summer.

Truck tariffs may not have yet significantly impacted overall prices, but many economists expect them to contribute to higher prices in the second half of the year as companies begin to pass on increased costs to consumers.

Retailers like Lululemon and J.M. Smucker have acknowledged they plan to raise prices in response to tariffs, indicating upcoming price hikes could impact back-to-school shopping.

As inflation remains above the Fed’s target, Fed Chair Jerome Powell insists it will be cautious in adjusting monetary policy until there’s a clearer understanding of the tariffs’ effects on the economy.

Many companies, like Bogg Bag, have already begun to raise prices as they face increased tariff costs. Founder Kim Vaccarella expects to raise prices on her products starting in July, reflecting the ongoing uncertainty in the market.

“We just need to get a handle on what will ultimately be the price we have to pay,” Vaccarella said regarding her pricing strategy amid tariff impacts.