[WASHINGTON] US consumer prices increased marginally in May amid cheaper petrol, but inflation is expected to accelerate in the coming months on the back of the Trump administration’s import tariffs.
The Consumer Price Index (CPI) increased 0.1 per cent last month after rising 0.2 per cent in April, the Labor Department’s Bureau of Labor Statistics (BLS) said on Wednesday (Jun 11). In the 12 months through May, the CPI advanced 2.4 per cent after gaining 2.3 per cent in April.
Economists polled by Reuters had forecast the CPI climbing 0.2 per cent and increasing 2.5 per cent year-on-year.
Excluding the volatile food and energy components, the CPI gained 0.1 per cent after rising 0.2 per cent in April. In the 12 months through May, the so-called core CPI inflation increased 2.8 per cent after rising 2.8 per cent in April.
The Federal Reserve tracks different inflation gauges for its 2 per cent target. The US central bank is expected to leave its benchmark overnight interest rate in the 4.25 per cent-4.50 per cent range next Wednesday while policymakers monitor the economic impact of the tariffs.
Inflation has been slow to respond to President Donald Trump’s sweeping tariffs as most retailers are selling merchandise accumulated before the import duties took effect. Economists expect inflation to heat up through the second half of the year. Walmart last month said it would begin raising prices in late May and June.
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The CPI data will come under close scrutiny in the months ahead also for another reason. Last week the BLS, which also compiles other economic releases including the closely watched employment report, announced the suspension of CPI data collection in three cities because of resource constraints.
The BLS like all government agencies has been severely affected by mass firings, voluntary resignations, early retirements and hiring freezes, which are part of an unprecedented campaign by the White House to drastically reduce the size of government and remake it.
The BLS has also announced that it would, effective with the release of the July Producer Price Index (PPI) data in August, end the calculation and publication of about 350 indexes. That would include data from PPI industry, commodity, final demand-intermediate demand and special index classifications.
Economists said that the BLS had with the CPI data reported a rise in the share of categories for which prices were calculated using a method called different cell imputation, which some viewed as less accurate.
But the BLS said on Tuesday its published data met rigorous standards. It, however, did not address staffing issues.
“Data quality is evaluated through measures of variance, bias studies, and assessments of survey methods,” the agency said in a statement to Reuters. “BLS continues to evaluate data quality.”
A former BLS commissioner told Reuters that staff levels were considerably low at the agency.
“I understand that BLS staffing is down by at least 15 per cent now, that’s not reflected in any official numbers yet, because many of them are still being paid,” said Erica Groshen. “They are not at work and it is impinging on the agencies. Also the hiring freeze means that they can’t be replaced.”
Groshen said the CPI report remained reliable, noting an increased shift towards electronic collection of data. REUTERS
