MAY 19, 2025 – INFLATION AND CONSUMER SENTIMENT DOWN
The CPI rose 0.2 percent for the month of April or 2.3 percent at an annualized rate, the lowest since February 2021. The reading was below economists’ expectations. It was good news, but worries over Trump tariffs and rebounding inflation remain.
The University of Michigan consumer sentiment index was down to 50.8 from 52.2 at the end of April. Economists were expecting a rise to 53.5. Americans remain worried about tariffs leading to inflation. The May figure is close to the low of 50.0 seen in June 2022 when a recession was expected. Consumer sentiment has fallen for 5 months in a row, and down 30 percent since December. The number may be overly pessimistic as it is lagging, as the survey was conducted before tariffs on China were lowered.
There remains a divide between the hard data of low unemployment and mild inflation, and the soft data of consumer anxiety. But the soft data could drive the hard as consumers may curtail activity in fear.
The consensus is a rate cut in June is unlikely to happen, the earliest a change is anticipated is now in September.