U.S. inflation rises slower than expected in May

On June 11, 2025, the Bureau of Labor Statistics released data indicating that U.S. inflation, as measured by the Consumer Price Index (CPI), rose by just 0.1% in May, which was lower than analysts had anticipated. This increase brought the annual CPI rate to 2.4%, slightly below the forecasted 2.5%. Core inflation, which excludes food and energy prices, remained steady at 2.8%. The factors contributing to the overall increase included rising shelter costs, which jumped 0.3%, while food costs also saw a 0.3% rise. Conversely, energy prices experienced a decline of 1.0%, led by a notable decrease in gasoline prices. The performance of the stock market was positively influenced by these inflation figures, as investors displayed an increased risk appetite amid signs of improvement in U.S.-China trade negotiations. President Donald Trump announced that a new trade agreement with China had been reached, pending formal signatures from himself and Chinese President Xi Jinping. With the Dow Jones Industrial Average surpassing 43,000—its highest since March 5—the market sentiment was buoyant. Treasury yields fell across the board, supporting expectations for future Federal Reserve interest rate cuts. In addition to market reactions, food prices beginning to rise led to contrasting predictions about inflation's future trajectory. While some factors, like core inflation remaining steady, hinted at stability, the overall increase in living costs could still impact consumers and economic policymakers significantly. The food index's slight increase of 0.3% was observed across major components of food prices, with cereals and bakery products rising 1.1%. The increasing food prices may raise concerns regarding the purchasing power of consumers. As the economic landscape continues to evolve, analysts are closely monitoring these developments to gauge their implications for monetary policy and consumer behavior. With the inflationary trends and responses from the stock market reflecting apprehensions about escalating prices, the next Federal Reserve meeting will likely focus on recalibrating the approach toward interest rates in light of these data releases. The interplay between trade relations and domestic economic indicators such as inflation could set the stage for ongoing fluctuations in both market dynamics and consumer spending.