Inflation is expected to accelerate in the coming months on the back of the Trump administration's import tariffs.

Inflation moved up in May as Trump's tariffs threatened to filter into consumer prices, CPI report shows. Gasoline prices declined for fourth month

Inflation rose less than expected in May, a month when the effects of higher tariffs were starting to become more widespread.

The Federal Reserve is widely expected to hold interest rates steady next week, with investors focused on new central bank projections that will show how much weight policymakers are putting on recent soft data and how much risk they attach to unresolved trade and budget issues and an intensifying conflict in the Middle East.

The Consumer Price Index rose 2.4 percent in May, from a year earlier, a reading that reflects only the initial impact of President Trump’s tariffs.

Inflation ticked slightly higher in May, rising 2.4%, in line with expectations, according to the U.S. Consumer Price Index released Wednesday. Prices rose 0.1 percent for the month, according to the Bureau of Labor Statistics. The month-over-month increase is less than expected.

The inflation rate is inching higher, with Wall Street expecting tariffs to increase prices throughout the remainder of 2025.

Forecasters say underlying US inflation likely picked up in May, reflecting a modest impact from tariff pass-through for goods that are mostly imported, while some services like airfares saw smaller price gains or outright declines.

Melissa Brown, managing director of investment decision research at SimCorp, says "investors are not placing enough emphasis on the inflation environment," and expects higher prices "over the next couple of months.