Tariffs Tangle: U.S. Consumer Spending Takes a Hit in May

In a surprising turn, U.S. consumer spending saw a decline in May, as the initial rush to purchase goods ahead of impending tariffs dissipated. According to the Commerce Department, while inflation held a steady pace, this dip in consumer expenditure is unlikely to sway the Federal Reserve's immediate monetary policy decisions.

Consumer spending, a vital component of the economy, fell by 0.1% last month after a slight rise in April. The unexpected drop, largely due to reduced expenditure on durable goods like motor vehicles and non-durable items like gasoline, contrasts with analysts' expectations of a small increase. Spending on services grew by a marginal 0.1%, held back by decreases in accommodation, dining, and transport services, while housing and healthcare saw some increments.

While the dollar remained steady, U.S. Treasury yields increased, and stock markets opened higher despite the data. The broader economic landscape continues to be affected by tariff uncertainties, but economists anticipate that inflation might accelerate starting with June's consumer price data.

(With inputs from agencies.)