U.S. Inflation Rises Amid Decrease in Consumer Spending
In May, U.S. inflation increased to 2.3%, while consumer spending fell by 0.1%, highlighting economic challenges amid rising prices.
Overview
- In May, the Personal Consumption Expenditures price index rose to 2.3%, up from April's 2.2%, indicating a slight increase in inflation.
- Core prices increased by 2.7% year-over-year, with a monthly rise of 0.2%, surpassing economists' forecasts and reflecting ongoing inflationary pressures.
- Consumer spending declined by 0.1% in May, marking the first reduction since January, as Americans cut back on spending due to rising inflation.
- Despite some rising costs, decreases in prices for new cars, airline fares, and rentals helped offset inflation, but consumer sentiment dropped sharply.
- The inflation figures suggest a modest impact from President Trump's tariffs, with the key gauge slightly above the Federal Reserve's 2% target, affecting consumer behavior.
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Analysis
Center-leaning sources frame inflation as a modest concern, highlighting slight increases while emphasizing consumer spending cuts. They suggest limited impact from tariffs, reflecting a cautious perspective on economic stability. The tone is analytical, focusing on data trends rather than alarm, indicating a balanced approach to reporting economic issues.
President Trump's broad-based tariffs are having only a modest effect on prices, according to inflation figures.
In May, prices only increased by 0.1% compared to April, indicating mild inflation.
Articles (7)
Center (2)
"…The inflation figures suggest that President Trump's broad-based tariffs are still having only a modest effect on prices."
CBS News·17d·"…Prices rose 2.3% in May compared with a year ago, up from just 2.1% in April, the Commerce Department said Friday."
Associated Press·17d·FAQ
The increase to 2.3% inflation in May was driven by a rise in the Personal Consumption Expenditures price index, with core prices up 2.7% year-over-year and a monthly rise of 0.2%, exceeding economists' expectations and indicating ongoing inflationary pressures.
Consumer spending fell by 0.1% in May, the first reduction since January, primarily because Americans cut back due to rising inflation and decreasing consumer sentiment, despite stable job growth and some offsetting decreases in prices of certain items like new cars and airline fares.
Tariffs, including President Trump's proposals, have had a modest impact on inflation, with the key inflation gauge slightly above the Federal Reserve's 2% target, contributing to rising prices that have affected consumer spending and sentiment.
Consumer sentiment declined sharply due to concerns over rising inflation and economic uncertainty, which led to cautious spending behavior and the first monthly drop in consumer spending in May 2025 after several months of growth.
Yes, older consumers tend to be more concerned about inflation compared to younger ones. For instance, Gen Z respondents often report more financial strain, fewer income gains, and higher rates of dipping into savings, influencing their cautious spending patterns.
History
- 17d
4 articles