Prices of toys, car parts and major appliances jumped in the US last month, but the overall impact of Donald Trump’s new tariffs on consumers remained relatively muted.
Prices were up 2.4% in May compared with a year ago, up from a rate of 2.3% in April, the latest official inflation figures showed.
Housing and grocery prices continued to rise, but those increases were offset by declines in other areas, such as petrol, airfares and clothing.
The monthly report from the Labor Department is being closely watched to see how Trump’s decision to raise taxes on imports plays out across the world’s largest economy.
Since re-entering the White House in January, Trump has imposed new tariffs on imports from around the world, putting in place a 10% tariff on most items, while targeting goods from some countries and sectors with even higher duties.
Economists have warned that the new levies will raise costs for companies, and lead to higher prices for households, risking the return of an inflation problem that appeared to be subsiding.
The White House, which put some of its most aggressive plans on hold to allow for talks, has rejected those forecasts. Officials have argued that companies in other countries will shoulder the burden of the new costs, while the tariffs benefit American producers and the wider economy.
For now, the consumer price report indicated that the impact on households remained relatively limited, primarily hitting items such as appliances, where the US depends heavily on China for supply.
Prices of major appliances jumped 4.3% over the month, while toys rose 2.2%, according to the report.
Overall, however, prices rose just 0.1% between April and May, after rising 0.2% a month earlier.
Analysts said they expected it would take time for the tariffs to work their way into the data, as companies work through their stock of products brought in before the tariffs were in place.
“Today’s below forecast inflation print is reassuring – but only to an extent,” said Seema Shah, chief global strategist at Principal Asset Management.
“Tariff-driven price increases may not feed through to the CPI data for a few more months yet, so it is far too premature to assume that the price shock will not materialise.”
The US central bank, the Federal Reserve, wants to see an inflation rate of about 2%.
It hiked interest rates dramatically starting in 2022 in an attempt to get then-rapidly rising prices back under control, and has made only limited cuts since then, even as the issue has moderated.
On Wednesday, Trump revived his call for the Fed to borrowing costs, arguing that inflation problems have faded.
But analysts said the Fed was likely to remain hesitant, given the uncertainty about the path ahead.
“The Fed will be reactionary and want to see how inflation does this summer when the tariffs hit inflation harder,” said Ryan Sweet of Oxford Economics.
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