US May PPI Remains Moderate, Tariff Effects May Be "Delayed"

A report released by the U.S. Bureau of Labor Statistics on Thursday showed that the U.S. core PPI for May fell short of expectations, influenced by moderate costs of goods and services. Although the current impact of higher tariffs on American consumers is not yet significant, economists point out that as businesses seek to avoid further erosion of profit margins, price pressures may intensify in the second half of the year. PPI data indicates that after a decline in April, profit margins for wholesalers and retailers expanded in May, particularly in the automotive and machinery wholesale sectors. Since the beginning of this year, profit margins have fluctuated month by month, highlighting the uncertainty of trade policy impacts on prices and demand. Analysts are paying close attention to the PPI report, as some of its components are used to calculate the Federal Reserve’s preferred inflation gauge (PCE data). Areas that performed weakly in May include airfares, portfolio management fees, and medical costs, which also remained moderate. The PCE report is scheduled for release later this month.