Bitcoin jumps near $110k after US inflation data shows signs of cooling

Bitcoin’s price increased 0.5% to $109,600 on Wednesday after United States inflation data for May came in below market expectations.

The asset’s move comes after a period of sustained strength, where it has held a range between $109,000 and $110,000 over the last three days.

The latest Consumer Price Index report showed year-over-year inflation of 2.4%, up from 2.3%, and core inflation of 2.8%, both figures below consensus forecasts.

The monthly core reading, which strips out food and energy, rose by just 0.1%, matching its slowest pace of the year and suggesting underlying price pressures are easing.

A deeper look into the BLS data reveals a notable divergence. The soft headline number was primarily driven by a 1.0% monthly fall in the energy index, with gasoline down 2.6%.

Declines in airline fares and used vehicles also contributed. However, persistent inflation remains in services, as the shelter index rose 0.3% for a fourth straight month, preventing a more substantial drop in the overall inflation rate.

This broad-based cooling of price pressures, particularly in the core measure, could bolster expectations for future interest rate cuts by the Federal Reserve.

The price reaction places Bitcoin near its recent highs but still below the all-time high of $111,900 set on May 22.

This stability follows a recovery from the prior week, during which Bitcoin traded between $103,000 and $105,000 and experienced a brief drop to $100,000 on June 5.

Tariff impact on inflation

The CPI data currently shows no clear evidence of a broad tariff impact pushing up prices. In fact, for key goods categories where tariffs would be most visible, the data points towards disinflation or deflation.

Here’s a breakdown of the analysis from the report:

Core Goods Prices Are Flat: The most important indicator here is the Commodities less food and energy commodities index.

This category, which covers most of the tangible, often imported, goods that would be subject to tariffs, showed 0.0% change for the month. This flatness suggests a lack of inflationary pressure from these goods.

Key tariff-sensitive categories decreased. Looking deeper, several major categories where tariffs would be expected to appear actually saw prices fall in May:

• New vehicles: -0.3%
• Apparel: -0.4%
• Used cars and trucks: -0.5%

Services, not goods, drive current inflation. The report explicitly states that inflation in May was driven by services, which are not directly affected by import tariffs.

• The Shelter index, the largest component of the CPI, rose by +0.3%.
• The Motor vehicle insurance index also rose sharply by +0.7%.

Therefore, while an analyst could argue that a small increase in a category like Household furnishings and operations (+0.3%) might contain a tariff component, the overwhelming evidence in the May 2025 report points away from tariffs as a current driver of inflation.

The dominant story in this data is falling energy prices counteracting persistent inflation in the services sector, particularly housing.

Given several’ 90-day pauses’ in tariff collection and technical issues collecting tariffs, tariff revenue has yet to come close to the levels required to replace the IRS, as President Trump promised. Thus, it is perhaps unsurprising that tariffs have visibly affected inflation.

Tariff revenue collected from US importers of $16 billion in April, followed by a projected $23 billion in May, post Liberation Day, is marginal in terms of the entire US economy.

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