May inflation was lower than expected

Inflation stayed mild in May, with the Consumer Price Index (CPI) up just 0.1% from April—lower than expected.

It put the annual inflation at 2.4% compared to a year ago, which is still low. Core inflation, which excludes food and energy, was 2.8%, slightly below forecasts.

Despite warnings from businesses about impending price hikes due to tariffs, the data showed declines in prices for cars and clothing.

Some goods affected by tariffs—like appliances and car parts—did rise in price, but the broader impact was muted.

Economists suggest that businesses have stocked inventory in advance, and weak demand is limiting price increases.

The Federal Reserve is expected to hold interest rates steady next week, but the CPI report could influence future decisions.