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US inflation rose less than expected to 2.4 per cent in May, even as President Donald Trump’s trade war fuels price pressures.
Wednesday’s annual consumer price index figure was below the 2.5 per cent predicted by analysts surveyed by Bloomberg, but above the 2.3 per cent recorded in April.
Inflation is expected to increase further in the coming months as the impact of Trump’s tariffs, which were unveiled in April, is passed on to consumers and businesses in the world’s largest economy.
The US currently applies a 10 per cent fee to most imports, as well as much higher levies on goods from China.
The US Federal Reserve is expected to hold borrowing costs at between 4.25 per cent and 4.5 per cent when it meets next week, in anticipation of further rises in inflation.
Trump has heaped pressure on Fed chair Jay Powell to follow the lead of the European Central Bank and the Bank of England and cut borrowing costs this year, pushing for a full percentage point cut and calling Powell “a disaster”.
The Fed’s preferred inflation measure, the personal consumption expenditures index, fell to 2.1 per cent in April, but is also expected to rise in the months ahead.
This is a developing story
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