Inflation Fears Rise Despite Consumer Spending Cutbacks

The latest Commerce Department data show an uptick in inflation, with prices rising 2.3% year-over-year in May, above the Federal Reserve's target. Despite tariff impacts, overall spending fell, and incomes dropped. The Fed, led by Jerome Powell, hasn’t reduced interest rates, seeking further economic clarity.

Inflation remains a concern as the latest data from the Commerce Department reveals a 2.3% rise in prices in May compared to the previous year, up from 2.1% in April. These figures surpass the Federal Reserve's target of 2%, indicating persistent inflationary pressures.

Americans reduced their spending by 0.1% last month with a notable decline in vehicle purchases, attributed to earlier buying to avoid tariffs. Incomes also fell by 0.4%, influenced by a one-time adjustment to Social Security benefits that had previously boosted figures in March and April.

While tariffs imposed by President Trump haven't fully impacted inflation, some companies, like Nike, expect significant cost increases, prompting price hikes. Meanwhile, the Federal Reserve remains cautious about rate cuts, awaiting more data on inflation and economic trends.

(With inputs from agencies.)