CPI print comes in softer than expected
The CPI report for May indicates that inflation has risen less than anticipated, with headline CPI up 0.1% month-over-month and 2.4% year-over-year, as opposed to the expected 0.2%. Core CPI also showed a 0.1% rise, defying predictions of a 0.3% increase. These figures suggest that tariff-related price hikes have not yet impacted consumers significantly. Several theories arise: businesses may be absorbing costs instead of passing them to consumers, or they could be relying on previously stockpiled inventories. Additionally, Chinese exports to Southeast Asia have surged as manufacturers divert from U.S. tariffs, leading to a 34.5% drop in shipments to the U.S. Consumer sentiment remains cautious, with new vehicle prices dropping 0.3% amid lower demand. Furthermore, the U.S. and China are reportedly negotiating a preliminary trade deal, which could adjust export controls and visa policies, impacting future inflation dynamics.
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