US Consumer Price Index edged lower than forecast in May
Weekly economic review for the week ended June 13, 2025
Last Wednesday, the US Labour Department reported that inflation rose to 2.4% in May, below the expected 2.5%. This was attributed to cheaper gasoline, which partially offset higher rents. However, inflation is expected to accelerate in the coming months due to the Trump administration’s import tariffs.
Core CPI, which excludes volatile food and energy prices, also rose 2.8% in May, matching April’s increase. On a monthly basis, CPI and the core CPI increased by 0.1%, falling short of analysts’ estimates of 0.2% and 0.3%, respectively.
Investors will scrutinise the details of this data to see whether President Donald Trump’s new tariff policies are driving up price pressures, which could have significant implications for the Federal Reserve’s policy decisions.
Meanwhile, the UK economy contracted more than expected in April. On Thursday, the Office for National Statistics (ONS) reported a decline of 0.3% in real gross domestic product for the month of April − the biggest drop since October 2023. Gross domestic product (GDP) was expected to decline by 0.1%, following a growth of 0.2% in March.
On the production side, services output contracted 0.4%, reversing March’s 0.4% rise. Compared with April 2024, GDP grew 0.9%, the ONS said. Industrial production fell 0.6%, slightly less than March’s 0.7% drop. In contrast, construction output rose at a faster pace of 0.9%, up from the previous month’s 0.5% increase.
UK exports to the US saw a sharp decline, being the largest monthly drop since records began in 1997. The national statistics office attributed this to new US import tariffs, particularly affecting cars, chemicals and metals.
Finally, eurozone’s industrial production saw a sharp drop. According to Eurostat, after an impressive first quarter, eurozone industrial production experienced an expected downturn in April, falling by 2.4% month-on-month. Year-on-year data remains up by 0.8%.
In the broader EU, production declined 1.8% month-on-month. All industrial sectors witnessed declines, with the largest drop in energy, which recorded a 1.6% decrease. The strong surge in the first quarter was driven by US front-loading of eurozone goods ahead of higher tariffs, but industrial production has now undergone the anticipated reversal.
This article does not constitute legal and, or financial advice and is being issued for information purposes only by Bank of Valletta plc, 58, Zachary Street, Valletta. Bank of Valletta is a public limited company regulated by the MFSA and is licensed to carry out the business of banking and investment services in terms of the Banking Act (Cap.371 of the Laws of Malta) and the Investment Services Act (Cap.370 of the Laws of Malta).