Inflation Softens

June 16, 2025 

Two leading measures of inflation paint a positive picture.

The Bureau of Labor Statistics has released both the latest Consumer Price Index (CPI) and Producer Price Index (PPI). The results are an overall positive surprise.

Consumer prices rose 0.1% in May, while the annual inflation rate increased to 2.4%. The numbers are considered a mixed bag, reflecting only a limited impact of new tariffs. In May, the Federal Reserve Bank of New York conducted a survey of businesses in the New York region and asked whether they are absorbing or passing on higher costs to customers. The results indicate that most businesses are passing on some tariff-inducted cost increases while 45% are passing along all tariff-related costs. Firms were asked how quickly they raised prices due to tariffs. The majority said within one month of higher costs caused by tariffs.

The Producer Price Index (PPI) for May fell to 3.0% year-over-year, slightly lower than expectations. The reading was up month-over-month. PPI is considered a leading indicator of CPI.