Inflation rose by one-tenth of a percentage point to 2.4% for the year ending in May, the Bureau of Labor Statistics reported Wednesday in an update to the consumer price index.
Forecasters had expected inflation to tick up to 2.5% in the CPI.
Core inflation, a measure that strips out volatile food and energy prices, held at a 2.8% annual rate for the third straight month.
Overall, the results suggest that price pressures remain subdued even as President Donald Trump carries out a trade war involving heavy tariffs. Economists generally expect that the tariffs will have the effect of raising prices.
In May alone, prices rose 0.1%.
“Today’s consumer inflation report is a real head-scratcher for economists as they ponder why the trade war hasn’t set off another inflation outbreak yet with core goods prices sitting on store shelves seeing no change in May,” said Chris Rupkey, chief economist at FWDBONDS.
The report showed that energy prices, broadly, fell 3.5% from May of last year — a welcome development for consumers.
Notably, egg prices in the CPI were down 2.7% from April to May. Trump was criticized early in his term for soaring egg prices, a development brought on by the spread of bird flu. Prices subsequently dropped and data from the U.S. Department of Agriculture shows that they continued to fall through this month.
Overall, food from the grocery store is 2.2% more expensive than last year, but food at restaurants has increased by 3.8% over the past 12 months.
Over the past year, some food items, such as ground beef, have increased in price by nearly 10%, but other food items, such as rice and lunchmeats, have seen year-over-year price declines.
Officials at the Federal Reserve are watching the inflation numbers closely to determine whether to lower interest rates further to spur more economic activity or to forgo further rate cuts to try to tamp down inflation.
The Fed cut rates by a whole percentage point last year. As inflation proved sticky, though, the central bank opted to hold interest rates steady at its January and March meetings.
The Fed’s goal is 2% annual inflation.
Inflation is also a major political issue for Republicans, who have already felt some backlash from voter anger about tariffs.
Trump and Republicans ran on lowering inflation, which reached its highest rates in decades under former President Joe Biden. Vanquishing inflation would provide a major advantage to Republicans heading into the midterm elections.
But if inflation ticks back up and the Fed is forced to keep holding interest rates higher for longer, it will undoubtedly be used as fodder by Democrats on the campaign trail.
Trump and others in the administration have tried to press the Fed and Chairman Jerome Powell to lower interest rates, although he has pushed back on the notion that the White House has any sway over monetary policy.
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Last month, Trump met with Powell for the first time in his second term.
White House press secretary Karoline Leavitt said afterward that Trump did push Powell to lower interest rates during the meeting, which was attended by several administration officials, including Vice President JD Vance, Treasury Secretary Scott Bessent, and Commerce Secretary Howard Lutnick.
