Tariffs and Staffing Challenges: A Double-Edged Sword for U.S. Inflation

Amidst tariffs imposed by the Trump administration, U.S. consumer prices are expected to have risen at a moderate pace in May. However, the implications reach deeper, with import duties likely exerting pressure on core inflation metrics. This rise comes as Walmart and other retailers start signaling price increases.

Data from the Consumer Price Index (CPI) may suggest a 0.2% increase, according to a Reuters survey, as cheaper gasoline partially balanced inflation. However, economists forecast higher core CPI figures as tariffs start impacting goods' prices. Federal Reserve's response will be pivotal as it maintains a close watch on inflation measures against its 2% target.

Challenges amplify with the Bureau of Labor Statistics (BLS) facing staffing cuts, impeding data accuracy. While BLS defends data quality, former commissioner Erica Groshen emphasizes the ripple effect of reduced staffing. Economists warn about potential future impacts if data collection constraints continue to rise.

(With inputs from agencies.)