Not Yet Inflating : June 9 – 13

Inflation remained muted for now in May. Here are the five things we learned from U.S. economic data released during the week ending June 13.

Consumer prices inched up in May. The Consumer Price Index (CPI) increased a seasonally adjusted 0.1 percent after having grown 0.2 percent in April. The Bureau of Labor Statistics measure has risen 2.4 percent over the past year. Food prices jumped 0.3 percent (cereals and bakery goods: +1.1%), while energy CPI fell 1.0 percent (gasoline: -2.6%). Net of food and energy, core CPI grew 0.1 percent, half of April’s 0.2 percent advance. Core CPI has swelled 2.8 percent over the past year. Prices rose for shelter (+0.3 percent) and healthcare services (+0.2 percent) but declined for used cars/trucks (-0.5 percent), apparel (-0.4 percent), and new vehicles (-0.3 percent).

Wholesale prices also made a modest move upward in May. The Producer Price Index (PPI) for final demand edged up a seasonally adjusted 0.1 percent following a 0.2 percent decline for the Bureau of Labor Statistics metric. The core wholesale price metric, which removes food, energy, and trade services, also had a modest 0.1 percent gain (April 2025: -0.1 percent). Goods PPI increased 0.2 percent, with prices holding steady for energy and inching up 0.1 percent for food. Services PPI also advanced 0.1 percent, with trade services (retailer and wholesaler margins) growing 0.4 percent. Over the past year, headline PPI rose 2.6 percent while the core metric increased 2.7 percent.

Americans grew more optimistic (or at least were less pessimistic about prices) in early June. The University of Michigan’s Index of Consumer Sentiment rose 8.3 points to a seasonally adjusted 60.5 (1966Q1=100). While this was the index’s best reading since February, it remained 20 percent below its December mark. The current conditions index added 4.8 points to 63.7, while the expectations index surged 10.5 points to 58.4. All three indices remained below year-ago levels. The press release noted improvements “were unanimous across the distributions of age, income, wealth, political party, and geographic region.” As consumers’ concerns about tariffs “softened somewhat,” so did their inflation expectations. They now anticipate prices will rise 5.1 percent over the next year and 4.1 percent annually over the long term. Both were at three-month lows but remained significantly elevated over historical levels.

Small business owner sentiment moderately improved in May. The National Federal Independent Business Small Business Optimism Index grew by 3.0 points to a seasonally adjusted 98.8 (1986=100). The index was 8.3 points below its year-ago reading. Seven of ten index components improved during the month, led by significant gains for expected real sales, expectations for economic growth, and current inventories. Falling were measures for earning trends and expectations to increase employment. The press release noted that “uncertainty is still high among small business owners.”

The federal government deficit continued to widen in May. The Department of the Treasury reports that government receipts through the first eight months of FY2025 have totaled $3.482 trillion, up 5.9 percent from the comparable months in the previous year. Driving the growth in receipts were individual tax revenues, customs duties, and social insurance/retirement receipts. Fiscal year-to-date expenditures were at $4.846 trillion, 7.9 percent ahead of the fiscal year-ago pace. Spending was up for Health and Human Services, Homeland Security, and interest payments on debt. The resulting budget deficit of -$1.365 trillion was up 13.5 percent from a year earlier. Treasury forecasts a -$1.878 trillion deficit for all of FY2025.

Other U.S. economic data released over the past week:

• Jobless Claims (Week ending June 7, 2025, First-Time Claims, seasonally adjusted): 248,000, Unchanged vs. the previous week, +7,000 vs. the same week a year earlier). 4-week moving average: 240,250 (+6.0% vs. the same week a year earlier).
• Wholesale Trade (April 2025, Merchant Wholesalers Inventories, seasonally adjusted): $908.7 billion (+0.2% vs. March 2025; +2.3% vs. April 2024).

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