Kristina Roberts
The cost of living in the United States went up slightly in May, but not as much as experts had predicted. The main reason for this small increase was that gasoline prices dropped, which helped balance out the rising costs of rent and some other items. However, economists are warning that inflation—which means how much prices are going up over time—could speed up in the coming months because of new taxes on imported goods, known as tariffs.
The latest report from the US Labor Department showed that the Consumer Price Index (CPI), which measures how much prices change for everyday items, only increased by 0.1% in May. This was less than the 0.2% rise that many experts had expected. Over the past year, prices have gone up by 2.4%, which is a little higher than the previous month’s increase of 2.3%.
One of the biggest reasons for the small rise in prices was that shelter costs, which include rent, went up by 0.3%. Food prices also increased by 0.3% after dropping slightly in April. Some grocery items, like cereals and bakery products, became more expensive, while others, like eggs, actually got cheaper. In fact, egg prices fell by 2.7%, giving shoppers a small break. Meanwhile, gasoline prices dropped by 2.6%, which helped keep overall inflation low.
Even though inflation was mild in May, experts believe it could start rising soon. This is because many stores are still selling products they bought before new tariffs were put in place. Once these older products run out, businesses may have to raise prices to cover the extra costs from the tariffs. Some companies, like Walmart, have already said they will start increasing prices in late May and June.
The Federal Reserve, which is the central bank of the US, is watching inflation closely. Right now, they are expected to keep interest rates the same at their next meeting. However, some people in the financial markets think the Fed might lower rates later in the year if inflation stays under control.
Daniel Hornung, a senior fellow at MIT, said, “This report shows that before tariffs and economic uncertainty, inflation was slowing down. The main thing that could push prices up now is the effect of tariffs.”
Apart from tariffs, another reason inflation has been slow to rise is that some services, like airline tickets and hotel stays, have not gotten much more expensive. In fact, airline fares dropped by 2.7% in May, and hotel prices also went down slightly. This suggests that people might be spending less on travel, which could be a sign of slower economic growth.
However, not everything is getting cheaper. Some items, like major appliances and toys, saw big price jumps in May. Appliances went up by 4.3%, the biggest increase in nearly four years, likely because of tariffs on steel and aluminum. Toy prices also rose by 1.3%, the highest increase since early 2023.
Healthcare costs continued to climb, rising by 0.3% in May. Car insurance and personal care items also became more expensive. On the other hand, used cars, new vehicles, and clothing prices all dropped slightly.
President Donald Trump has been pushing for lower interest rates, even suggesting that the Federal Reserve should cut rates by a full percentage point. At the same time, his administration has imposed several tariffs on goods from other countries, especially China. While the White House argues that these tariffs are paid by foreign companies, many businesses in the US say they have no choice but to pass the extra costs on to consumers.
Economists believe that as stores start running out of inventory bought before the tariffs, prices will begin to rise more noticeably. Some businesses are raising prices slowly to avoid shocking customers or drawing too much attention from the government.
There are also concerns about how accurate future inflation reports will be. The Bureau of Labor Statistics (BLS), which collects the data for the CPI, has faced budget cuts and staffing shortages. Last week, they announced they would stop collecting price data in three cities because they don’t have enough resources. They also plan to stop publishing hundreds of other economic indexes later this year.
Despite these challenges, the BLS has said that their published data still meets high-quality standards. In a statement, they said, “Data quality is evaluated through measures of variance, bias studies, and assessments of survey methods. BLS continues to evaluate data quality.”
For now, the inflation numbers suggest that prices are rising slowly, but many experts think this could change in the coming months. If tariffs lead to higher costs for businesses, those increases will likely show up in the prices consumers pay. The Federal Reserve and economists will be watching closely to see how much inflation speeds up—and whether it forces the central bank to change its plans on interest rates.
In the meantime, shoppers may want to enjoy the small breaks they’re getting on things like eggs and gasoline, because those prices might not stay low for long. With trade policies and economic uncertainty playing a big role, the next few months could bring bigger changes to the cost of living in the US.
