Concerns over President Donald Trump’s ongoing tariffs are so far being wildly overstated by political opponents, according to a new inflation report that has economists feeling optimistic about the U.S. economic outlook for the rest of 2025.
Consumer prices rose just 0.1% in May, bringing the annual inflation rate to 2.4%, or half the increase economists had projected. The Consumer Price Index (CPI), a key indicator tracking a wide range of goods and services, is often used to assess the overall health of the economy.
The report was welcomed by President Trump, who cited the figures as further justification for urging Federal Reserve Chair Jerome Powell to cut interest rates. “CPI JUST OUT. GREAT NUMBERS! FED SHOULD LOWER ONE FULL POINT. WOULD PAY MUCH LESS INTEREST ON DEBT COMING DUE. SO IMPORTANT!!!” Trump wrote on Truth Social.
Vice President J.D. Vance echoed the president’s sentiment, noting on social media: “The president has been saying this for a while, but it’s even more clear: the refusal by the Fed to cut rates is monetary malpractice.”
Core CPI, which excludes food and energy, rose by 0.1% for the month and 2.8% year-over-year, both below CNBC’s forecasts of 0.3% and 2.9%, respectively. Federal Reserve officials typically view core CPI as a more accurate measure of long-term inflation trends. According to the report, overall CPI increased 0.1% from April, while core CPI remained unchanged.
Some economists expressed caution, though. “Today’s below forecast inflation print is reassuring – but only to an extent,” said Seema Shah, chief global strategist at Principal Asset Management. “Tariff-driven price increases may not feed through to the CPI data for a few more months yet, so it is far too premature to assume that the price shock will not materialize.”
The U.S. Bureau of Labor Statistics released its latest report more than two months after President Trump’s “Liberation Day” rollout of broad-based tariffs on foreign imports. While the move initially rattled financial markets, it has since resulted in several trade negotiations with other countries.
On Tuesday, the White House announced the framework for a de-escalated relationship with China after a prolonged trade dispute. Officials from both nations indicated they are close to finalizing an agreement that would grant the U.S. access to critical raw minerals controlled by China—resources essential for electric vehicles, smartphones, and other advanced technologies.
