May Inflation Ticks Up as Tariffs Drive Core CPI Higher and Data Accuracy Faces BLS Strain

U.S. consumer prices likely rose moderately in May, driven by relatively cheaper gasoline but offset by emerging inflation pressures due to tariffs imposed by the Trump administration. According to the upcoming Consumer Price Index (CPI) report from the Labor Department, the core CPI, excluding volatile food and energy, may show its largest increase in four months.

Economists believe this marks the start of tariff-related inflation that could persist through the end of the year, as rising import costs begin to affect a broader range of goods.

Retail Prices Begin Rising as Tariff Effects Deepen and Annual Inflation Rates Climb

Retailers had largely held prices steady through April, but that restraint appears to be waning. Companies like Walmart announced plans to raise prices starting in late May, reflecting the delayed impact of import tariffs. Economists expect the main effects of these tariffs to show up in June and July as retailers exhaust pre-tariff inventories. May’s CPI is forecast to rise 0.2%, the same as April, with falling gasoline prices helping to offset some inflationary pressures.

On a year-over-year basis, CPI is projected to increase by 2.5%, up from 2.3% in April, partially due to last year’s low inflation figures dropping out of the comparison. The core CPI is expected to rise by 0.3% in May—the biggest jump since January—and show a 2.9% increase over 12 months. Despite these inflationary signs, the Federal Reserve is anticipated to maintain its benchmark interest rate as it assesses the economic impact of the tariffs and monitors broader inflation trends.

Staff Shortages and Cuts Threaten Accuracy of BLS Inflation and Price Data Reports

The accuracy and coverage of inflation data may face growing scrutiny due to significant staffing shortages at the Bureau of Labor Statistics (BLS), the agency responsible for the CPI. Resource constraints have already forced the suspension of CPI data collection in three cities. The BLS, affected by federal downsizing initiatives, plans to stop publishing over 350 indexes from other economic indicators like the Producer Price Index starting in August.

Despite staffing reductions and suspended data collection, the BLS insists that its published CPI data still meets high-quality standards. Former officials and economists acknowledge that while national-level data remains reliable, localized or more detailed statistics may suffer. The increased use of electronic data collection has helped mitigate some issues, but experts warn that further cuts or suspensions could eventually undermine the comprehensiveness and reliability of U.S. inflation tracking.